How Does the Teacher Retirement System Work?

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

American public schools currently employ roughly 3.2 million full-time teachers, and about 2 percent of those retire annually. That means around 64,000 teachers go into permanent summer break every year.

How Does Retirement Work for Educators?

Teachers and other education-related workers at the state and municipal level are often eligible to participate in a retirement planning program called the Teacher Retirement System (TRS). The TRS is an organization that helps provide retirement benefits for teachers.

Because these systems are set up at the state and locality level, they vary significantly from state to state. However, most retirement programs using the TRS name are qualified retirement plans under ERISA code section 401(a). The TRS typically offers a defined benefit pension plan, which guarantees a monthly benefit based on plan-specific features.

Teachers might also be offered other retirement benefits under their specific plan. In addition to the TRS pension plan, many teachers are eligible for a tax-deferred annuity program under code section 403(b) of the IRC. A 403(b) plan operates more like a 401(k) salary reduction plan, which allows participants to defer some of their own salary into the plan, offering an effective way for teachers to save in addition to their TRS pension plan.

TRS Plans Vary by State

Because the TRS varies across the country – in fact, it could vary across your state or even your district – it is important to review your local plan. Plans change over time, which means teachers who started working at an earlier date could be under one version while employees that started at a later date are subject to a different version.

For example, in New York there are six different tiers of membership based on date of enrollment. The difference between tiers impacts when you can claim benefits, how much you receive, inflation protections, and how fast your benefits accrue. As a result, New York teachers experience significant differences between tiers and across plans.

Typical TRS Benefit

The benefit in a TRS is usually based off of a few factors. Typically, the plan takes into account a pension factor that is multiplied by your age or years of service in the plan which is then multiplied by your final average salary.

Read the full article on TheBalance

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

3 Key Financial Events to Watch In 2017

Published By Brett Carson Last year saw financial markets alternating between an uneasy calm and turbulence, with 2017 expecting much of the same. Developed markets are facing a paradigm shift as the U.K. initiates its exit from the European Union and the United States’ transition to …

Is Your Financial Advisor a Fiduciary?

Published By Brett Carson Financial advisors will have a new regulation to deal with starting April 10: It’s called the fiduciary rule, and it’s the biggest legal change governing the financial advice industry in years.

Ron Carson Joins Institute for the Fiduciary Standard Advisory Board

The Institute for the Fiduciary Standard has added four industry notables to its Board of Advisors, joining Vanguard founder John Bogle and Tamar Frankel, law professor at Boston University. The new advisory board members are former SEC Commissioner Luis Aguilar, noted advisor Ron Carson, a …

Carson Wealth’s New Strategy to Capture Assets

Carson Wealth Management, one of the industry’s most influential planning firms with more than $8 billion in client assets under management and advisement, is luring in big clients and small ones, too. The strategic shift amounts to nothing less than a sea change pushed by the furious …
1 2 3 14 15 16 17 18 26 27 28

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation