TRS: General Information (Contributions and Vesting) FAQ

▼   What type of retirement plan is TRS?
The TRS is a defined benefit plan qualified under Section 401(a) of the Internal Revenue Code. A defined benefit plan provides the employee with a specific benefit at retirement.
▼   Am I required to participate in this retirement plan?
Participation in the TRS is mandatory if a person is employed in a position eligible for coverage in a non-temporary capacity for at least one-half time basis (FTE .50) earning at least the federal minimum wage.
▼   How much do I contribute per month?

Tier I (Member before 1/1/2013) All eligible employees contribute 7.5% (8.5% for Firefighters, Law Enforcement, and Correctional Officers employees) to TRS.

Tier II (Member on or after 1/1/2013) All eligible employees contribute 6% (7% for Firefighters, Law Enforcement, and Correctional Officers employees) to TRS.

▼   When am I eligible for retirement?

Tier I (Member before 1/1/2013) Employees are eligible for retirement at age 60 with 10 or more years of participating service or at any age with 25 or more years of participating service.

Tier II (Member on or after 1/1/2013) Employees are eligible for retirement benefits at age 62 with 10 or more years of participating service.

▼   How much does the University contribute?

Total employer contribution for fiscal year 2017 (October 1, 2016 through September 30, 2017) is:

Tier I (Member before 1/1/2013): 11.94%

Tier II (Member on or after 1/1/2013): 10.84%

It is important to understand that a defined benefit plan is not a matching plan. Employer contributions will guarantee vested employees a lifetime retirement benefit.

▼   When will I be vested?

Employees have a vested status in the TRS after accumulating 10 years of creditable service.

▼   What happens to my contributions at resignation or termination of employment?

For vested employees that have not attained the required retirement age you may leave your account inactive and file for retirement once you have reached the required retirement age (Deferred Retirement). You may also roll over or cash out your account, however the right to a lifetime monthly retirement benefit at required retirement age is forfeited.

Tier I (Member before 1/1/2013) Employees are eligible for retirement benefits at age 60 with 10 or more years of participating service or at any age with 25 or more years of participating service.

Tier II (Member on or after 1/1/2013) Employees are eligible for retirement benefits at age 62 with 10 or more years of participating service.

For non-vested employees you will have the following options (employee contributions only):

  1. You may leave your account inactive in case you return to work for a TRS participating employer in the state of Alabama. After 5 years of inactivity, the account will stop earning interest.
  2. You may roll over to another qualifying retirement account. Upon withdrawal, the service credit established with TRS is cancelled.
  3. You may cash out. If under age 59 ½, you will pay a 10% early withdrawal penalty as required by the IRS and 20% federal income tax. Upon withdrawal, the service credit established with TRS is cancelled.

Employee contributions are only refunded at the request of the employee upon termination of employment and by submitting an application for refund (Form 7). There are no partial refunds; all contributions are refunded in full. Interest on the account is only refunded if the member has at least 3 years of membership service. The employee is not entitled to the total interest credited to the account:

Years of Membership Service
Amt. of Interest Refunded
Less than 3 yrs. None
3 yrs., but less than 16 yrs. 50%
16 yrs., but less than 21 yrs. 60%
21 yrs., but less than 26 yrs. 70%
26 yrs. or more 80%
▼   Are there any life insurance or death benefits?

If a member dies prior to retirement, death benefits are calculated and paid to the beneficiary(ies) based on the member’s age, service credit, employment status and eligibility for retirement. For more details visit www.rsa-al.gov.

▼   How do I change my listed beneficiary(ies)?
Pre-retirement: Please complete the Change of Beneficiary Prior to Retirement Form.
 
Retired Members: Contact TRS for additional information.