At retirement, an eligible service retiree may select a partial lump sum option (PLSO) distribution in addition to either a reduced standard annuity or a reduced optional form of annuity. The following requirements apply:
If you are not “grandfathered,” then effective September 1, 2005, you may select the PLSO if you: If you are “grandfathered,” you are eligible for a PLSO under the requirements in effect prior to September 1, 2005. Under these requirements, you are eligible for PLSO if you meet all of the following requirements:
Formula for Calculating Maximum Standard Annuity - Tier 1 or 2
Years of Service times Percentage Factor times Average Highest 3 or 5 Years of Salary
Equals Yearly Maximum Standard Annuity
EXAMPLE
35 years x 2.3% = 80.5 x $70,000 Average Salary = $56,350
Maximum Standard Annuity for 12 monthly benefit amounts of $4,695
Tier 1 uses the Average Hightes 3 Years Salary
The standard annuity may be reduced due to early age, retirement annuity payment option selected, PLSO or other reductions required by law.
The example above is hypothetical for illustrative purposes only. Each individual situation will be different. Please consult your financial or tax professional or Jay A. Finn, CPA LLC regarding your circumstances.
Non-Grandfathered PLSO must meet the rule of 90.
If you are eligible, you may select a PLSO equal to 12, 24 or 36 months of a standard service retirement annuity. When you select the PLSO by submitting a completed “Application of Service Retirement” form, your annuity will be actuarially reduced to reflect your selection. Disbursement of your PLSO selection will be made depending on which distribution method you select:
Most people select 36 months in one lump payment. The selection of a PLSO reduces a retiree’s annuity. This reduced annuity plus income on the PLSO should be close to the standard annuity benefit. Most often the reduction is 73%-77%.
Post-retirement increases, when authorized by the legislature, are based on the amount of the retiree’s reduced annuity. If you are eligible for PLSO, the online retirement estimate calculator on the TRS website will estimate your PLSO amounts.
Source: TRS Website - trs.texas.gov
Learn more about the Teachers Retirement Services program.
Your eligibility for service retirement is determined by your age and years of TRS service credit. In combination, your age and years of service credit, along with the date you joined TRS and your eligibility for grandfathering, determine when you are eligible for an unreduced, normal-age retirement annuity or for an early-age retirement annuity reduced according to actuarial tables or based on a flat percentage rate.
Learn more about the TRS Annuity options available.
