Teacher's Retirement Systems'of Alabama

Current Employee Elligibility

Eligibility:
Employees are required by state law to participate in the Teachers' Retirement System of Alabama (TRSA) as a condition of employment. This provision applies to both full-time regular employees and part-time employees working at least 20 hours per week.

Costs:
Employees contribute 5% of their gross annual salary with a matching amount paid by the University. The matching amount varies and is based on an actuarial determination of the amount necessary to provide benefits granted by law for members.

Vesting:
After 10 or more years of creditable service, a member has vested interest in the retirement fund. Retirement is permitted, once vested, at age 60. Members who have 25 years of creditable service may retire regardless of age.

Benefits:
This is a defined benefit program (NOT a defined contribution plan). The amount of retirement income is determined by the number of years of participation, the average final salary (using the best three out of the last ten years) and the option chosen by the individual at the time of retirement.

Taxes:
Participation in TRSA is on a tax-deferred basis. Employees' contributions to the retirement plan are not subject to Federal taxes. The result is less tax withheld and more take-home dollars in each paycheck. These contributions are not taxed until they are withdrawn from TRSA, which usually occurs at retirement when the applicable federal tax rate will be lower for most individuals. TRSA contributions are NOT tax-deferred for the state income tax purposes. Therefore, monthly retirement benefits from TRS are not subject to Alabama State income tax.

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Withdrawal Options Upon Termination

Termination:
Upon termination of employment, a member may elect to withdraw contributions, transfer the monies into an IRA account or another qualified plan, or allow the account to be held in suspense.

Withdrawals:
Members who elect to withdraw the funds are subject to a 20% federal withholding tax and a 10% IRS mandated penalty for withdrawing a retirement account early. Members only withdraw their portion of the money and NOT the University matching amount. Members who have three or more years of service will receive 1/2 of the interest.

Transfers:
If the member elects a direct trustee-to-trustee transfer (roll-over) into an IRA account or another qualified plan they are NOT subject to the 20% withholding tax or 10% IRS penalty. The member electing direct transfer (Not TRSA) is responsible for verifying the eligibility of the plan receiving the direct transfer of the TRSA account.

Suspense:
A member may elect to allow the account to be in suspense for up to five years. At the end of five years the member may elect to withdraw the money or transfer the funds to an IRA account or other IRS compatible account. Members must complete a "Notice of Final Deposit and Request for Refund" form to withdraw or transfer their funds.

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Repurchase Options

Members who have previous military service, in-state service, and/or out-of-state service have the following repurchase options available:

Military Service:
Credit for up to four years of eligible military service may be purchased if the individual is not already receiving retirement or disability income from the military. This must be done during the first year of employment.

In-State Service:
Prior service in RSA and service in the National Youth Administration may be purchased after the member has been re-employed for two years.

Out-Of-State Service:
Prior out-of-state service may be purchased after 10 years (once vested). This only applies to withdrawn accounts and not to retirement programs from which one is receiving or is eligible to receive an income.

Retirement:
Employees wishing to retire should contact the Employee Benefits Office so that the appropriate "Application for Retirement" can be completed. TRSA requires the application at least 30 days before the effective date of retirement but not to exceed 90 days. Upon retirement, unused accrued sick leave up to a maximum of 12 days for each year of credited service can be applied toward service credit for retirement calculations.

For more information on TRSA visit their web site: http://www.rsa-al.gov/