How Annuities Work in a Comprehensive Retirement Plan

Your comprehensive retirement plan is a retirement benefit, through the Teachers’ Retirement System, that includes a defined annuity paid upon retirement.

TRS is a defined benefit retirement plan qualified under Section 401(a) of the Internal Revenue Code. As a result of the qualified status of TRS, since Aug. 1, 1982, regular contributions to TRS are deducted from your salary and are not subject to taxation. Once retired, annuity payments are subject to taxation.

You may not withdraw your contributions to TRS unless you permanently separate from service from your TRS-covered employment, nor may you borrow against your contributions to TRS. If you do permanently separate from service from your TRS-covered employment, and if you do wish to then refund your contributions to TRS, you may maintain the tax-deferred status of your contributions to the retirement system by rolling them over or transferring them in a timely and appropriate manner to another qualified tax-deferred plan.

If you are eligible to retire when you permanently separate from service from your TRS-covered employment, you must elect to receive a retirement allowance from TRS rather than a refund of your contributions, unless you wish to use your contributions to purchase retirement credit in another retirement system or unless a TRS retirement allowance would make you ineligible for Social Security benefits. You do not, however, make FICA contributions to Social Security as a result of your TRS-covered employment unless you are an employee of a university or community college. As a result of your employment in a position that does not participate in Social Security, the current federal Windfall Elimination Provision law will reduce any Social Security income that you could draw from any Social Security-covered employment and the federal Government Pension Offset will substantially reduce any Social Security benefit that you might draw as the spouse or widower of a Social Security recipient. These are provisions of federal law.

You may contact the Social Security office or visit its website at for details.