Vesting is a key concept, but many people are not familiar with the benefits of this important milestone. This gap in knowledge can cause you to unknowingly limit your retirement savings significantly and forfeit your access to a lifetime benefit.
What is Vesting?
Vesting is a legal term that means to earn a right to a future benefit. Though all Georgia public school education professionals are automatically enrolled into TRS, our members must be vested in order to be eligible for a future pension.
Vesting is an important milestone because:
- you will be eligible to receive a monthly benefit upon reaching age 60, even if you do not earn additional creditable service;
- your primary beneficiary will be eligible to receive a monthly benefit upon your death if you have an active TRS account; and,
- you are eligible to apply for disability retirement as an active TRS member.
Get inVESTED with TRS
Like most plans, TRS requires a minimum number of years of service before a member is entitled to receive a benefit.
Vesting at TRS occurs when a TRS member has earned 10 years of creditable service.
Once you are 60 years old with at least 10 years of service credit or achieve 30 years of service credit, you are eligible to retire. The TRS retirement plan is determined by a formula based on your years of service and/or age and your final average salary (see example below), and is guaranteed to last for your lifetime.
**The salary used to calculate your benefit may be limited if increases in your salary are above what Georgia law deems allowable.
TRS Benefit Formula
years
x
x
average salary
=
monthly benefit
Service Credit
Your # of years of creditable service, including partial years
Multiplier
Your years of creditable service is multiplied by 2%
Final Average Salary
Your final average salary for the 2 highest consecutive years of membership service*
Monthly Benefit
Your initial monthly benefit payment (under Plan A Maximum)**
*Benefit calculation is based on the 2 highest years that produce the highest benefit, which may not include your last years worked.
**The salary used to calculate your benefit may be limited if increases in your salary are above what Georgia law and the General Assembly deem allowable.
What Happens if I Withdraw My Contributions from TRS?
If you are thinking about switching careers, moving out of state, or taking a break from education, it may sound tempting to withdraw your funds and receive a lump-sum payment of your contributions and interest. However, that decision may come back to haunt you when you're ready to enjoy those golden years in retirement.
Please consider the following before you make that irrevocable decision.
Leave the funds with TRS
If vested, you are eligible for a lifetime, monthly benefit starting at age 60.
Account remains active for 4 years and interest is accrued on contributions.
After 4 years, the account becomes inactive and no interest is earned.
May come back to work with a TRS-covered employer and earn additional service credit.
Primary beneficiary eligible to receive monthly benefit upon your death if account is active.
Eligible for disability retirement.
Example
17 years of service x 2% x $5,761
(final average salary) = $1,959
Member will receive $1,959 per month at age 60 for the rest of their life.
Benefit increases with Cost of Living Adjustment (COLA), if eligible.
Withdraw TRS funds
If vested, you forfeit a lifetime, monthly benefit.
May receive lump-sum payment of only your contributions and interest, which is subject to taxes. You do not receive any employer contributions.
May do a direct rollover of funds to a qualified retirement plan and defer taxes.
If you return to a TRS-covered employer and earn at least 3 years of creditable service, you may purchase your withdrawn service.
Example
Receive a one-time lump-sum payment of $63,990, before taxes.
No lifetime monthly benefit. Relinquish over $597,000 in benefits (assumes 25 years of benefits, COLA not included).
Would have to purchase withdrawn service if returned to work for TRS covered employer.
Still Have Questions?
Over the years, we have witnessed too many members requesting refunds of their contributions and interest after vesting; not only losing their employer contributions, but forfeiting a monthly benefit at age 60 for the rest of their lives. If you are vested, before you cash out and give up what could be a substantial piece of your retirement income, please contact us at TRS to discuss your options.