Current through Reg. 49, No. 38; September 20, 2024
(a) The contributions required from a member
to the Teacher Retirement System of Texas are generally based upon the member's
annual compensation. Benefits paid by the retirement system are also generally
based in whole or in part upon the annual compensation credited to a member for
certain school years. A member's annual compensation for any particular school
year has the meaning given by the law and rules applicable for that year.
Beginning with the 1981-1982 school year, and for school years thereafter,
annual compensation consists of the salary and wages that are paid or payable
to a member for employment which is eligible for membership in the retirement
system during that school year.
(b)
Some payments made by an employer to a member are not salary or wages, even
though the payments may be otherwise considered as compensation under the
employment contract or federal tax laws. In general salary and wages creditable
and subject to deposit are those types of monetary compensation that are
recurring base pay for periods of employment and that:
(1) are earned or accrue proportionally as
the work is performed, so that a member terminating employment between pay
periods is entitled to a proportional amount of the compensation based on
either length of employment or amount of work performed;
(2) are paid or payable at fixed intervals,
generally at the end of each pay period; and
(3) are not specifically excluded under
subsection (d) of this section.
(c) The following types of monetary
compensation are to be included in annual compensation:
(1) amounts deducted from regular pay for the
state-deferred compensation program, for a tax-sheltered annuity, or for a
deferred compensation arrangement qualifying under the United States Internal
Revenue Code, §401(k);
(2)
normal payroll deductions which are not tax-exempt or tax-deferred;
(3) additional compensation paid for
additional duties, for longevity, for overtime worked as required by law, or
for service in a particular location or specialty the employer determines
requires additional compensation compared to other employees of that employer,
provided that these payments clearly meet the requirements of subsection (b) of
this section;
(4) delayed payments
of lump-sum amounts which by law or contract should have been paid at fixed
intervals and which otherwise meet the requirements of subsection (b) of this
section provided the amounts are credited to the payroll period in which they
were earned;
(5) amounts withheld
from regular pay under a cafeteria plan as provided by §
25.22
of this title (relating to Contributions to Cafeteria Plans and Deferred
Compensation);
(6) performance pay
provided it meets the requirements §
822.201(b)(4),
Government Code and §
25.24
of this title (relating to Performance Pay);
(7) compensation received under the relevant
parts of the educator excellence awards program under Subchapter O, Chapter 21,
Education Code, or a mentoring program under §
21.458, Education Code,
that authorize compensation for service, and compensation earned under the
awards for student achievement program under Subchapter N of Chapter 21,
Education Code, prior to the repeal of statutory provisions authorizing that
program;
(8) a merit salary
increase made under §
51.962,
Education Code;
(9) amounts
deducted from regular pay for a qualified transportation benefit under §
659.202,
Government Code;
(10) compensation
designated as health care supplementation by an employee under Subchapter D,
Chapter 22, Education Code;
(11)
workers' compensation paid as temporary wage replacement pay and reported or
verified to TRS and with member contributions paid on the amount of workers'
compensation, by the end of the school year following the year in which it was
paid. Workers' compensation paid as temporary wage replacement pay and not
reported or verified to TRS with member contributions paid on the workers'
compensation in the time period provided may be verified and purchased as
provided in §
25.45
of this title (relating to Verification of Unreported Compensation or Service)
and §
25.43
of this title (relating to Cost for Unreported Service or Compensation) no
later than the end of the fifth year following the school year in which it may
be reported or verified under this paragraph; and
(12) increased compensation paid by a school
district using funds received by the district under the teacher incentive
allotment under §
48.112,
Education Code.
(d) The
following are excluded from annual compensation:
(1) allowances, including housing, car, cell
phone, and expense allowances;
(2)
reimbursements for expenses;
(3)
payments for accrued compensatory time for overtime worked or for accrued sick
leave or vacation, except that continued payments of normal compensation when
vacation, sick, administrative, or emergency leave or compensatory time is
actually taken by an employee will be included in annual compensation to the
extent otherwise permitted by this section;
(4) benefits, except as provided in
subsection (c)(1) of this section, which either are not subject to federal
income tax or which will be subject to federal income tax in a future
year;
(5) bonus and incentive
payments, including signing or retention bonuses that are offered to entice a
person to enter into an employment arrangement or to stay for a period of time
in an employment arrangement, whether paid under Subchapter O, Chapter 21, the
Education Code, or other authority, unless state law expressly provides that a
type of bonus or incentive payment is to be considered TRS-creditable
compensation;
(6) employer payments
for fringe benefits, including direct cash payments in lieu of fringe benefits,
except as provided in §
25.22
of this title (relating to Contributions to Cafeteria Plans and Deferred
Compensation);
(7) payments, except
as provided in subsection (c)(1), (2), (5), and (9) of this section, made to
third parties for the benefit of a member;
(8) payments for work as an independent
contractor or consultant;
(9) all
nonmonetary compensation;
(10)
active employee health coverage or compensation supplementation or any other
amount received by an employee under former Article 3.50-8, Insurance Code;
former Chapter 1580, Insurance Code; Subchapter D, Chapter 22, Education Code,
as that subchapter existed on January 1, 2006; or Rider 9, page III-39, Chapter
1330, Acts of the 78th Legislature, Regular Session, 2003 (the General
Appropriations Act), regardless of whether the employee receives the amount in
cash, uses it for payment of health care coverage, or uses it for any other
option available by law;
(11) any
other fringe benefit;
(12) payments
that an employer intentionally does not include in salary and wages because
they are not expected to be permanently recurring in each pay period of
employment or because they are not considered base pay and that, for the
protection of the actuarial soundness of the retirement system, the type of
payment should not be included in the calculation of a lifetime retirement
benefit intended to replace a percentage of the member's base pay at
retirement;
(13) payments for
terminating employment or paid as an incentive to terminate employment.
Examples of such payments include payments for contract buy-outs, amounts paid
pursuant to an agreement in which the employee agrees to terminate employment
or to waive or release rights to future employment, and amounts paid pursuant
to early retirement incentive programs or other programs intended to increase
the compensation paid to the employee upon receipt of the resignation of the
employee or the waiver or release of rights to future employment. Increased
compensation paid in the final year of employment prior to retirement that
exceeds increases approved by the employer for all employees or classes of
employees is presumed to be payment for terminating employment;
(14) payments received under relevant parts
of the educator excellence awards program under Subchapter O, Chapter 21,
Education Code that do not represent payments for service rendered by the
member;
(15) except as provided in
§
25.28(e)
of this title (relating to Payroll Report Dates), amounts paid pursuant to a
settlement agreement except that compensation paid to an employee while on paid
leave of any type, including paid administrative or emergency leave under the
terms of a settlement agreement is creditable under paragraph (3) of this
subsection; and
(16) differential
pay that is less than 50% of the compensation for service in a full-time
position. Differential pay is pay by an employer to a member who leaves
membership eligible employment to serve in the military and the pay represents
all or some of the difference between what the member earned in the TRS covered
employment and what he or she is earning in the military job. Differential pay
that is at least 50% of the compensation for full-time service in the
membership eligible position may be reported to TRS and deposits submitted at
the discretion of the employer.
(e) The maximum amount of compensation of any
member that may be taken into account under the retirement system shall not
exceed $150,000 for plan years commencing on or after September 1, 1996. For
plan years commencing on or after January 1, 2002, the maximum amount of
compensation shall not exceed the limit contained in the Internal Revenue Code
§401(a)(17)(A),
26 United
States Code
§401(a)(17)(A). For
plan years beginning before January 1, 1997, in determining the compensation of
any member for any year, the family aggregation rules of the Internal Revenue
Code §414(q)(6),
26 United States Code
§414(q)(6) shall apply
except the term "family" shall include only the spouse of the member and any
lineal descendants of the member who have not attained age 19 before the end of
the year. The limits set forth in the first two sentences of this subsection
shall be increased from time to time, to reflect cost of living increases, in
accordance with the Internal Revenue Code §401(a)(17),
26 United
States Code
§401(a)(17). The dollar
limitation prescribed in the first two sentences of this subsection shall not
apply to limit the compensation of any person who first becomes a member before
September 1, 1996. Furthermore, that limitation shall not apply for any period
during which such limitation is repealed or is not enforced by the Internal
Revenue Service with regard to governmental plans. In applying the limits
described in this section, a plan year is September 1 through August
31.
(f) TRS may rely upon employer
certifications in determining creditable compensation or may conduct an
investigation to determine whether any ineligible compensation has been
reported. At the request of TRS, employers will provide copies of any records
or information the retirement system requests. Such records may include, but
are not limited to, copies of contracts, work agreements, salary schedules or
addenda, board minutes, payroll records, or other materials that will assist
the retirement system in making a determination.
