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Section 415 of the Internal Revenue Code imposes limitations on benefits paid by qualified plans, like TRS.
Benefit limitations
TRS must determine if your retirement annuity exceeds the federally allowed payment limit.
If your retirement annuity exceeds the payment limit allowed by the Internal Revenue Code, the excess balance of your monthly retirement annuity will be paid from the Teachers’ Retirement Excess Benefit Fund. Because payment is being made from two separate funds, the Teachers’ Retirement Trust Fund and Excess Benefit Fund, you will receive two annuity payments each month.
All federal withholding will be taken out of your Teachers’ Retirement Trust Fund annuity payment.
For example, if you receive $7,000 per month from the Teachers’ Retirement Trust Fund and $1,000 from the Teachers’ Retirement Excess Benefit Fund, the federal withholding will be taken from the Teachers’ Retirement Trust Fund and will be based on a monthly pay of $8,000 and your filing status (single, married, etc.,).
2.2 Upgrades, ERO, and most optional service purchases are not subject to 415 limitations
The 415 contribution limit does not apply to most after-tax optional service purchases or optional service purchases made by your employer on your behalf. The 415 limit does apply if your employer is purchasing optional service on your behalf for employment with a national or statewide teacher organization.
Purchasing optional service credit
You may be eligible to purchase optional service credit for
- out-of-system service,
- part-time teaching before 1990,
- substitute teaching before July 1, 1990,
- layoffs,
- leaves of absence,
- service interrupted by pregnancy or adoption,
- military service,
- and reinstating TRS service for a prior refund.
Call us for help in documenting your eligibility for optional service, (800) 877‑7896.
Disclaimer
TRS does not provide tax advice. Please seek professional assistance for all of your personal tax planning needs.
Questions?
If you have questions, please contact us.
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