Retirement Prep

Members sometimes say they have no idea how to start planning for TRS retirement. We understand the decision to leave your career and retire can be daunting, and our staff are here to make the TRS piece of that puzzle as easy as possible!

• If you are within a few years of retirement, attend a TRS "Ready, Set, Retire!" webinar or live presentation to learn more. If none are scheduled, you can watch a video recording. See the Training Resources page for links.
• Have you received a Retirement Application packet? Watch a recorded webinar on our Training Resources page for tips on completing it. 
• Contact a TRS Benefit Officer with questions you may have. Telephone numbers and email addresses are provided on the Contact Us | Staff Directory page (Active Benefits Team section).

Use the timeline below as a guide during your final two years of employment. 

TWO YEARS before you plan to retire:

• Talk to a TRS Benefit Officer about the benefit options available to you;
• Ask your employer how much you might receive in termination pay (an estimate is fine); and
• Log into My TRS and use "My Benefit Estimator" to run an unofficial, preliminary estimate.

ONE YEAR before you plan to retire:

• Ask your employer for an updated estimate of your termination pay;
• Log into My TRS and run another unofficial estimate of benefits with the updated termination pay amount; and
• Contact TRS to confirm whether you plan to "invest" your termination pay in TRS to boost your monthly retirement benefit. There are costs and certain deadlines involved, so don't delay!

SIX MONTHS before your retirement date:

• Request a Retirement Application packet from TRS by calling 406.444.3134 or 866.600.4045.
• When your packet arrives, carefully review the various retirement allowances described on the application materials, and decide which allowance might be best for you.
• Fill out the forms in the Retirement Application packet, and call TRS anytime with questions!

THREE MONTHS before your retirement date:

• Make sure you have submitted all required application materials to TRS. If you are still employed, your employer may be required to complete and sign certain forms, so please confirm those have been completed and submitted to TRS as well.
• If you are purchasing service and you have a balance remaining, be sure to pay it off before you terminate employment. Log into My TRS or talk to a TRS Benefit Officer if you are unsure of your remaining balance.

TRS can provide an Estimate of Benefits (EOB) showing your estimated monthly benefit under the various retirement allowances and termination pay options available to you.

If you request a Retirement Application packet and there is no record in our system that TRS has provided an EOB to you previously, our staff will be sure to include one in your packet.

• Vested members of TRS can run their own preliminary estimates using My TRS. However, you may prefer to have TRS staff produce the estimate for you, in case there are tax implications, an unpaid service purchase, or other contingencies that could affect the estimate.

If you are eligible to purchase service with TRS (e.g., for out-of-state or private school teaching, military service, leave of absence or previously withdrawn service), we strongly recommend you contact our office as early in your career as possible. Don't wait until you are ready to retire! The longer you wait, the more it will cost to pay the necessary contributions to TRS.

Service purchases must be completed before TRS processes your application for retirement. For information about the various service purchase types, eligibility requirements and potential costs, a TRS Benefit Officer at 406.444.3134.

The Estimate of Retirement Benefits that you received from TRS should be the basis of all decisions. In many cases, the estimate is not enclosed in the packet and would have been provided to you earlier after a phone conversation or in-person visit with a TRS benefit officer.

When a member has a significant pay increase (greater than 10%) from one fiscal year to the next, and the increase was not due to movement on the employer’s salary matrix, TRS is required by law to cap those earnings to 110% of the previous fiscal year’s reported earnings for purposes of calculating the member’s retirement benefit.

• For an illustration of the 110% cap rule, watch our TRS “Ready, Set, Retire!” presentation.

Form 129, Termination Pay Irrevocable Election (or "TPIEF"), is a form that allows you to “invest” your termination pay in TRS to boost your Average Final Compensation (AFC) and thereby increase your retirement benefit.

Form 129 is sometimes called the "90-day form" because, in order to have your employer send your termination pay to TRS on a pre-tax basis, both you and your employer must have signed the form at least 90 calendar days prior to your last day of work or PIR day. This is an IRS requirement.

The reason you might owe money to TRS at the time of retirement is related to the "90-day form" (Form 129, Termination Pay Irrevocable Election) described above. Remember that any termination pay owed to you by your employer has not been reported to TRS as earned compensation. For that reason, if you want to use termination pay to increase your retirement benefit, you and your employer will owe contributions to TRS to fund that benefit increase.

Often, a member’s termination pay will exceed the amount you will owe TRS in contributions. However, some members who elected Termination Pay Option 1 (for the largest benefit increase) and who accrued 30+ years of creditable service with TRS will have an “out-of-pocket expense” because their termination pay is not enough to cover their share of contributions.

• To see an illustration of these costs, watch our recorded “Ready, Set, Retire!” presentation.

Remember, your election on Form 129 is irrevocable and you can’t change your mind based on any out-of-pocket expense you might encounter at the time of retirement.

Only you can determine which retirement option will be best for you and your family. However, an important factor to consider may be whether someone else will rely on your retirement income after you pass away. If the answer is yes, you might consider choosing a Joint and Survivor annuity option or a Period Certain and Life option, which may provide a continuing benefit to your surviving joint annuitant or eligible beneficiaries. The Normal Form allowance (largest benefit) does not provide a continuing monthly benefit to survivors.

• TIP: Watch our recorded "Ready, Set, Retire!" presentation for a description of the six TRS retirement allowances. Remember, once you have received your first monthly payment, you cannot choose a different allowance.

That may depend on your circumstances. We recommend you consult with a tax professional to determine whether you may owe Montana income tax. (No Montana income tax will be withheld without your explicit instruction to do so. TRS also cannot withhold income tax for any state other than Montana.)

• For more information, read the TRS Fact Sheet, Tax Withholding on Monthly Benefits.

The IRS prohibits pension plans from paying retirement benefits to a person who has not had a “bona fide separation from service,” meaning the employment relationship has been completely severed.  There also are limits on how much a retired member can earn in a TRS-reportable position while also receiving retirement benefits. The applicable rules and limitations – as well as a few specific exceptions – are outlined in the TRS Fact Sheet, Working After Retirement.

Note: These rules and limitations apply only to retired members who choose to return to work in positions reportable to the Montana Teachers’ Retirement System. They do not apply to retirees who take jobs in unrelated fields or who continue teaching out of state, for example.