You Have a Defined Benefit Retirement Plan

Defined Benefit Group Retirement Plan

Your Defined Benefit Retirement Plan is a retirement benefit, through the Teachers’ Retirement System, that pays a defined amount upon retirement.  The amount is based on length of service, final average salary and a retirement multiplier. TRS retirement eligibility is determined by the employee’s age and years of service. The service retirement benefit is a lifetime benefit and is guaranteed by TRS.

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TRS Is A Defined Benefit Retirement Plan

TRS is a defined benefit retirement plan qualified under Section 401(a) of the Internal Revenue Code and is operated on a fiscal year basis ending June 30 of each year. As a result of the qualified status of TRS, since Aug. 1, 1982 your regular contributions to the retirement system that are deducted from your salary are not subject to taxation, but the portion of your retirement allowance based on these pretax contributions will be. Under 401(a) defined benefit group retirement plans such as TRS, you are eligible upon retirement to draw a retirement allowance for the rest of your life regardless of how much you contributed to the retirement system over your career in a TRS-covered position.

A TRS retirement allowance by law may not be assigned by you, or attached or garnished by a creditor, except for the payment of court ordered child support or to satisfy an Internal Revenue Service tax levy. 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 their website at www.ssa.gov for details.

The National Institute on Retirement Security

The National Institute on Retirement Security is a nonprofit research and education organization established to contribute to informed policy-making by fostering a deep understanding of the value of retirement security to employees, employers, and the economy as a whole.

Defined Benefit Plan – A Better Solution

Visit NIRS: National Institute on Retirement Security