TRS Plan 1 members who accumulate 30 years of service credit may elect to participate in the Post 30-Year Program.
If you elect to participate, you make an irrevocable decision to have post 30-year contributions placed in a separate, refundable account that earns 7.5 percent interest annually (compounded quarterly). The contributions and interest from this account are refunded at retirement and will not reduce your monthly retirement benefit.
However, your Average Final Compensation (AFC) at retirement will be based on the highest two consecutive fiscal years (July 1 – June 30) of compensation earned before your election date.
Your election date is the first of the month after the Department of Retirement Systems (DRS) receives your election form, and your decision is irrevocable at this point.
To participate in the program, your service credit must be earned in TRS Plan 1; dual membership service credit does not apply.
The decision whether or not you should participate in the program will depend on your individual circumstances. This brochure is designed to help you understand how participation in the program works.
DRS will send you a notification letter a few months before you earn 30 years of service credit.
You have six months from the time you accumulate 30 service credit years to choose to participate in the program. Please be advised that many individuals reach 30 years of service before the end of the school year. You reach 30 years after you have completed 144 full days in the fiscal year of your thirtieth service credit year.
If you work more than 30 years, your monthly retirement benefit calculation is influenced by two factors:
If you do not elect to participate in the program within six months after you accumulate 30 service credit years, you no longer have the option to participate. If you do not participate in the program, your AFC will be based on your salary for the highest two consecutive fiscal years of your career and all contributions will remain in your original retirement account. If you elect to participate in the program, the effective date of election is the first of the month after DRS receives your election form. If you have not reached 30 years when the election form is received, the effective date is the first of the month after you reach 30 years.
The effective date of election is a very important consideration because your AFC will be based on earnings prior to the effective date of election. For example, if your election date is June 1, your salary for June and thereafter will not be used to determine your AFC.
If your salary will not increase after 30 years, it may be to your advantage to participate in the program. If you are not sure what your future earnings will be, you may want to discuss the program with your financial advisor.
If you would like an estimate of benefits based on your current account information and your expected salary for the next five years, complete and return the attached Request for Post 30-Year Program Benefit Estimate Form. Estimates based on different election dates can be requested for comparison.
If you do not withdraw any of your accumulated contributions, your maximum monthly retirement benefit is calculated as follows:
Maximum Monthly Benefit = 2% x service credit
years (up to 30) x AFC ÷ 12 months.
AFC is determined by adding the compensation (salary, wages, etc.) for your two highest-paid consecutive fiscal years (July 1 – June 30), and then dividing by two. A higher AFC provides a higher benefit.
If you elect to participate in the program, only salary earned prior to your election date will be used to determine your AFC. Thus, your projected salary beyond 30 years of service is an important consideration.
If you choose to participate in the program, you will receive your post 30-year contributions and interest when you retire from TRS Plan 1. You cannot defer receiving your post 30-year funds. However, you can roll the funds over to an Individual Retirement Account (IRA) or qualified retirement plan that accepts 401a plan rollovers.
If you are younger than 59 and a half when you retire from TRS Plan 1, and you do not rollover your post 30-year funds, there may be an additional 10% Internal Revenue Service (IRS) tax on your refund.
For more information on the tax treatment of payments from eligible retirement plans, check out IRS publication 575, Pension and Annuity Income, available online, from your local IRS office, or by calling (800) TAX-FORMS.
Please note that DRS staff are not authorized to give tax advice.
The following examples show the influence of salary and participation in the program. Shannon attains 30 years of service credit in June 2006, at the age of 54. Shannon’s salary:
| Does NOT elect Post 30-Year Program | DOES elect Post 30-Year Program |
|---|---|
|
Years of service credit: 32 |
Shannon works until her 32nd year and elects the program as soon as she is eligible (July 1, 2006). |
* Under the 2 percent formula, the maximum benefit amount of 60 percent of AFC is reached at 30 years.
For more information about the Post 30-Year Program, contact DRS.
The actual provisions governing the Post 30-Year Program are contained in the Revised Code of Washington (RCW) Chapter 41.32 RCW. This publication is a summary of those provisions, not a complete description of the law, and describes provisions currently in effect. If there are any conflicts between what is written in this publication and what is contained in the law, the applicable law will govern.
