There have been so many changes — and rumored changes — to TRS benefits that many of our members are (justifiably) confused about what exactly is in current law. Here are answers to some common questions we receive at TCTA headquarters.
Will I have to work until age 60/age 62/Rule of 90 to retire with full benefits?
The majority of current school employees can still retire under a Rule of 80 (age plus years of TRS credit total at least 80), with no age restrictions.
MINIMUM AGE 60
If you entered TRS-covered service (or re-entered, after previously withdrawing your prior TRS credit) after Sept. 1, 2007, AND have at least five years of TRS credit as of Aug. 31, 2014, you will have to be at least age 60 at retirement to receive full benefits.
MINIMUM AGE 62
If you do not have at least five years of TRS credit as of Aug. 31, 2014, you will have to be at least age 62 at retirement to receive full benefits.
If one of these exceptions applies to you, you can still retire upon meeting the Rule of 80, but if you are under age 60 or 62, as applicable, your benefit will be reduced by 5 percent for each year under the relevant age. For example, if you fall under the “minimum age 60” exception, and you retire at age 58, your benefit will be reduced by 10 percent.
If you will have at least five years of TRS credit by Aug. 31, 2014, and you entered TRS-covered service prior to Sept. 1, 2007, you only have to meet the Rule of 80 for full retirement benefits, regardless of your age.
RULE OF 90
THERE IS NO RULE OF 90 FOR FULL RETIREMENT. You may need to meet a Rule of 90 only for a very specific benefit — the Partial Lump Sum Option, under which you can receive a portion of your retirement benefit in a lump sum, with a lowered monthly benefit. For “regular” retirement, the Rule of 80 is still the prevailing law. And if, as of Aug. 31, 2005, you were at least age 50, had at least 25 years of service credit, OR met a Rule of 70, you can take the PLSO without having to meet the Rule of 90.
Aren’t there some new criteria for TRS-Care now too?
Yes, depending on your individual situation, you may not have full access to TRS-Care when you retire.
First, the basic requirements for TRS-Care eligibility are that you must have at least 10 years of TRS credit (not including purchased credit other than military service credit), and either meet the Rule of 80 at retirement or have at least 30 years of TRS credit.
Next, think ahead to Aug. 31, 2014. On that date, will you either have at least 25 years of TRS credit, or meet a Rule of 70 (age plus years of TRS credit)? If so, you’ll still have full access to TRS-Care at retirement, as long as you meet the “basic requirements” noted above. But if not, you’ll need to be at least age 62 to access all levels of TRS-Care. If you don’t meet either of those criteria and you’re under 62, you can only enroll in TRS-Care 1 (catastrophic coverage) until you turn 62.
Is it true that my purchased service credit won’t help me meet the Rule of 80 for TRS-Care purposes?
It USED to be true, but that provision was repealed in 2005. With the exception of military service credit, purchased credit won’t count toward the required 10 years of service credit, but will count toward the Rule of 80 or the 30 years of credit required for TRS-Care access.
There have been a lot of changes to retire/rehire lately. What do I need to know?
The most recent changes to the laws regarding employment after retirement were made in the 2011 legislative session.
THE OLD LAW
Many employees are familiar with the old “six-month exemption,” under which a retiree could return to school employment full time as soon as the school year after retirement, but would begin losing TRS benefits after six months of working. Once school was out, TRS benefits would resume, and then the cycle would repeat each school year, so that most retirees returning to work would earn a teaching salary plus eight or nine months of TRS checks. A different provision allowed retirees teaching in shortage areas to return after a 12-month sit-out without losing any TRS benefits after six months.
In 2011, the Legislature eliminated the six-month exemption, instead requiring that an employee sit out for at least 12 full calendar months before returning to work. However, upon the retiree’s return, he/she could work full-time, year-round, with no loss of TRS benefits — essentially the provision that previously only applied to shortage-area teachers.
Employees who retired prior to Jan. 1, 2011, are exempt from the 12-month sit-out requirement, and may return to work full time with no loss of benefits.
The surcharge on school districts hiring retirees remains in place. With the exception of retirees who were employed (as retirees) in 2005, and who were reported to TRS as being retire/rehires specifically in January 2005, districts must make payments to TSR and TRS-Care on behalf of any retiree they employ. The district will contribute the state and employee contributions (13.2 percent of salary for the 2013-14 school year) to TRS, and will contribute to TRS-Care the difference between the premium you pay for your TRS-Care coverage and the actual cost of that coverage.
I keep seeing something about deadlines for buying service credit, can you explain?
The deadline is imminent! A law passed in 2011 increases the costs of purchasing many types of service credit, including unreported/substitute service, withdrawn service, and out-of-state service. A grace period allows TRS members to purchase the service credit at the previous (cheaper) cost as long as the payment is made in full, or an installment agreement entered into, no later than Aug. 31, 2013. Many of the costs will be increasing significantly, so we encourage members to look into purchasing any service credit for which you are eligible as soon as possible.
There are so many different dates and deadlines, I’m losing track. Can you please clarify?
It definitely has gotten complicated. Employees should be aware of the following key dates:
January 2005 – A retiree who was employed by a district in a return-to-work capacity in January 2005 will not be subject to the retire/rehire district surcharge. As long as the employee remains in the same district, he/she can continue to be employed as a retiree and the district will not have to make the TRS and TRS-Care contributions.
Aug. 31, 2005 – An employee who was 50 years old, had 25 years of TRS service credit (including purchased credit), OR met the Rule of 70 by this date is exempt from certain key benefit changes adopted in the 2005 legislative session. Such an employee would not have to meet a Rule of 90 to be eligible for the Partial Lump Sum Option, and would have retirement benefits calculated using an average of the three highest years of salary rather than the five highest.
Sept. 1, 2007 – An employee entering the TRS system on or after this date will be subject to the law requiring that an individual be at least age 60 at retirement in order to receive full benefits. (An exception: If the employee does not have at least five years of TRS credit by Aug. 31, 2014, he/she will have to be at least age 62 at retirement for full benefits.)
Jan. 1, 2011 – An employee retiring prior to this date may return to work full time without losing any TRS benefits; a 12-month sit-out from school employment is not necessary.
Sept. 1, 2013 – After the date, the costs of purchasing most types of service credit will increase significantly.
Aug. 31, 2014 – An employee who, as of this date, does not have at least five years of TRS credit will have to be age 62 at retirement to receive full benefits. Such an employee would be penalized 5 percent for each year under age 62 (e.g., an employee retiring at age 60 would receive only 90 percent of the normal retirement benefit).
Additionally, an employee who, as of this date, does not meet a Rule of 70 or have at least 25 years of TRS credit will have to be age 62 to have full access to all levels of TRS-Care (retiree health insurance). Such an employee retiring earlier than age 62 could only enroll in Level 1, catastrophic coverage.