TRS Glossary of Terms

A

accumulated contributions—the sum of all the amounts deducted from the compensation of a member or paid by a member and credited to the member's individual account in the annuity savings account, together with interest. Regular interest must be computed and allowed to provide a benefit at the time of retirement.

active membership—an active member is a person included under the provisions of 19-20-302, MCA.

actuarial equivalent—a benefit of equal value when computed upon the basis of the mortality table and interest rate assumption set by the retirement board.

administrative officer—an employee who has a significant degree of executive or policy-making authority and whose appointments are based on required training or experience in the field of education.

alternate payees—a participant in a retirement system may have the participant's rights modified or recognized by a family law order. For more detailed definitions, see 19-20-305, MCA.

average final compensation (AFC)—a member's highest average earned compensation, determined pursuant to 19-20-805, MCA, on which all required contributions have been made.

B

beneficiary—one or more persons formally designated by a member or retiree to receive a retirement allowance or payment upon the death of the member or retiree, except for a joint annuitant.

benefit recipient—an individual who is receiving a monthly benefit or other payment from TRS. In addition to TRS retired members, the term includes others who receive payment such as joint annuitants, beneficiaries, and alternate payees.
board—see retirement board.

board rulemaking authority—the board shall administer the plan in the manner required to satisfy the applicable qualification requirements for a qualified governmental plan, as specified in the Internal Revenue Code.

break-in-service requirement—a TRS member who terminates employment January 1, 2024 or later and retires may not return to employment in a position reportable to the retirement system until the employee has a break in service of 120 calendar days, commencing on the first day following the member's date of termination. For details and limited exceptions to this requirement, see 19-20-734, MCA.

C

cost basis—the employee's contribution in a member's account on which taxes have already been paid.

creditable service—creditable service of a member begins on the date of the member's employment in a capacity prescribed for eligibility in 19-20-302 and accumulates to the member's credit on the basis of the retirement board's policy governing creditable service. For more detailed definitions, see Title 19, Chapter 20, Part 4, MCA.

D

dormant membership—an inactive member who has failed to take one of the actions described in 19-20-303(4) within 7 years of becoming an active member; see inactive membership.

duplication of credit—a member may not receive duplicate credit for the same period of service. A retiree returning to active service may not be granted creditable service for the same period of time that the retiree was receiving a retirement benefit.

E

early retirement—a member who is not eligible for service retirement, but has attained the age defined in 19-20-802, MCA.

earned compensation—remuneration paid for the service of a member out of funds controlled by an employer before any pretax deductions allowed under the Internal Revenue Code are deducted. Earned compensation does not include: direct employer premium payments on behalf of members for medical, pharmaceutical, disability, life, vision, dental, or any other insurance; any direct employer payment or reimbursement for professional membership dues, maintenance, housing, day care, automobile, travel, lodging, or entertaining expenses, or any similar form of maintenance, allowance, or expenses. Adding a direct employer-paid or noncash benefit to an employee's contract or subtracting the same or a similar amount as a pretax deduction is considered a fringe benefit and not earned compensation. For further details on earned compensation limitations, see 19-20-101(12)(b)(c), MCA and 19-20-715, MCA.

effective retirement date—the first of the month following termination for retirement.

employer—as defined in 19-20-101(13), MCA means the state of Montana; a public school district; the office of public instruction; the board of public education; an education cooperative; the Montana School for the Deaf and Blind; the Montana Youth Challenge program; a state youth correctional facility; the Montana University System; a community college; or any other agency, political subdivision, or instrumentality of the state that employs a person who is designated a member of the retirement system pursuant to 19-20-302, MCA. For more detailed definitions of the duties and liability of the employer, see 19-20-208, MCA.

employer's supplemental contribution—employers' contributions to the retirement system as a supplemental amount defined in 19-20-609, MCA.

F

family law order—see alternate payees.
fiscal year—The fiscal year for TRS is July 1 through June 30.

full-time service—service that is:(a) at least 180 days in a fiscal year; (b) at least 140 hours a month during at least 9 months in a fiscal year; or (c) at least 1,080 hours in a fiscal year under an alternative school calendar adopted by a school board and reported to the office of public instruction. The standard for full-time service for a school district operating under an alternative school calendar must be applied uniformly to all employees of the school district required to be reported to the retirement system.

G

Guaranteed Annual Benefit Adjustment (GABA)—the annual increase in the gross monthly benefit amount each January for benefit recipients who have received at least 36 benefit payments as of December 31 of the prior year. The GABA rate varies according to the retiree's membership tier, as described in 19-20-719, MCA.

H

I

inactive membership—a nonvested or vested member who is no longer employed in a position reportable to the retirement system becomes an inactive member as described in 19-20-303, MCA.

Internal Revenue Code—the Internal Revenue Code of 1986, as amended, or as it may be labeled or further amended. References to specific provisions of the Internal Revenue Code mean those provisions as they may be otherwise labeled or further amended.

investment in contract—see cost basis.

J

joint annuitant—the one person that a retired member who has elected an optional allowance under 19-20-702, MCA has designated to receive a retirement allowance upon the death of the retired member.

K

L

M

member—a person who has an individual account in the annuity savings account. Unless otherwise specified, "member" refers to a tier one member or a tier two member. See also active membership, dormant membership and inactive membership.

membership service—service performed by an active member in a position reportable to the retirement system and for which creditable service is awarded to the member, but does not include creditable service awarded or purchased for periods of time not actually worked by the member.

membership termination—active membership in the retirement system of any person terminates when the person: 1) ceases to be employed in a position reportable to the retirement system and becomes an inactive or dormant member as described in
19-20-303, MCA; 2) retires on a retirement allowance of the retirement system; 3) withdraws the person's accumulated contributions to the retirement system under the provisions of 19-20-603, MCA; or 4) dies.

Montana University System supplemental contribution—the University System's contribution to the retirement system as a supplemental amount defined in 19-20-621, MCA.

N

normal form retirement allowance—a monthly retirement benefit payable during the lifetime of the retired member.

normal retirement age—an age no earlier than 60 years of age.

O

optional allowances—one of the allowances described in 19-20-702, MCA, subsection(2) or (3) which, until the first payment on account, any member may elect to receive in lieu of the normal form retirement allowance.

P

part-time service—service that is not full-time service. Part-time service must be credited in the proportion that the actual time worked compares to full-time service.

pension accumulation account— the account in which the reserves for payment of retirement allowances and benefits must be accumulated and from which retirement allowances and benefits must be paid to retirees or their beneficiaries.

position reportable to the retirement system—a position in which an individual performs duties that would entitle the person to active membership in the retirement system under the provisions of 19-20-302, MCA.

post-retirement employment limitations—a retired member may be employed in a position that is reportable to the retirement system and may earn, without an adjustment of retirement benefits, an amount not to exceed the greater of: (i) 49% of the sum of the member's average final compensation; or (ii) 49% of the median of the average final compensation for members retired during the preceding fiscal year as determined by the retirement board. For more detailed information about exceptions and exclusions that may apply, see 19-20-731, MCA.

pre-arranged agreement—an oral or written agreement for the member to provide service to perform work at any time in the future made between the member and the employer before the member attains retired member status. This includes employment in any capacity, including: an employee of the employer, an employee of a third party, an independent contractor, a volunteer, and a position reportable to PERS.

Q

R

redeposit of contributions previously withdrawn—except as provided in subsection (3), in addition to the contributions required under 19-20-602, MCA and 19-20-608, MCA, subject to the approval of the retirement board, and to the extent permitted by section 415(k)(3) of the Internal Revenue Code, a member may redeposit in the annuity savings account, by a single payment or by an increased rate of contribution, an amount equal to the accumulated contributions that the member has previously withdrawn, plus interest paid as follows: (a) if a written application to purchase service is signed prior to July 1, 2012, at the rate the contributions would have earned had the contributions not been withdrawn; or (b) if a written application to purchase service is signed on or after July 1, 2012, at the actuarially assumed interest rate in effect on the date the written application is signed. (2) The redeposit must be made in accordance with 19-20-415, MCA. (3) A member may not redeposit contributions previously withdrawn under this chapter after retirement benefit payments to the member have started, even if the member returns to active member status.

reemployed retiree—a retired member who qualifies for temporary reemployment with no loss or interruption of their monthly benefit under the "emergency hire" provisions described in 19-20-732, MCA. Both the retired member and employer must satisfy several requirements to be eligible under this provision.

regular interest—interest at a rate set by the retirement board in accordance with 19-20-501(2), MCA.

retiree—a person who is considered in retired member status under the provisions of 19-20-810, MCA.

retired member—see retiree.

retirement benefit—a monthly payment owed to a retired member who has qualified for service or disability retirement or owed to a joint annuitant or beneficiary.

retirement board—the retirement system's governing board provided for in 2-15-1010, MCA.

retirement system—the Teachers' Retirement System of the state of Montana provided for in 19-20-102, MCA.

S

service—the performance of duties that would entitle the person to active membership in the retirement system under the provisions of 19-20-302, MCA.

service retirement—a member is eligible to receive a service retirement allowance if the member has met the creditable service and age requirements in 19-20-801, MCA.

state contributions—contributions are statutorily appropriated, as provided in 17-7-502, MCA, to the pension trust fund. See also, 19-20-604, MCA.

supplemental state contribution—the monthly state contribution, as a supplemental contribution to the teachers' retirement system, from the general fund to the pension trust fund an amount equal to 2.38% of the total earned compensation of school district and community college active members participating in the system. For more detailed definitions, see 19-20-607, MCA.

suspension of benefits—if a retired member returns to employment in a position covered by the retirement system and becomes an active contributing member, benefits must be suspended until the member terminates all TRS-reportable employment and applies to have benefits reinstated. Exceptions apply; see 19-20-733, MCA for more detailed information.

T

termination—the employment relationship between the member and the member's employer has been terminated as required in 19-20-810, MCA.

termination date—the last date on which a member performed service in a position reportable to the retirement system.

termination pay—any form of bona fide vacation leave, sick leave, severance pay, amounts provided under a window or early retirement incentive plan, or other payments contingent on the employee terminating employment. Termination pay does not include: amounts that are not wages under section 3121 of the Internal Revenue Code, determined without regard to the wage base limitation; and amounts that are payable to a member from a plan for the deferral of compensation under section 457(f) of the Internal Revenue Code, 26 U.S.C. 457(f). More more detailed definitions, see 19-20-716, MCA.

tier one member—a person who became a member before July 1, 2013, and who has not withdrawn the member's account balance.

tier two member—a person who became a member on or after July 1, 2013, or who, after withdrawing the member's account balance, became a member again on July 1, 2013 or later.

transfer of dormant or unclaimed accounts—if an inactive member's annuity savings account has been dormant for a period of 7 years, the amount in the annuity savings account is transferred to the pension accumulation account. The transfer may not jeopardize a right of the member, and upon the member's request the amount must be transferred back to the member's annuity savings account, including interest the amount would have earned if it had not been transferred. In the event of a member's death, retirement benefits must be claimed within 5 years of the date of death. If the named beneficiary for the account or the heirs at law fail to claim and accept the benefits, the member's account balance reverts to the pension trust fund. See also beneficiary and dormant membership.

U

V

vested—a member has been credited with at least 5 full years of membership service upon which contributions have been made and has a right to a future retirement benefit.

W

withdrawal (refund) of accumulated contributions—a person whose membership terminates, and for whom there is no prospect or anticipation that the member will return to work in a TRS reportable position within 60 days of termination, may withdraw membership in the retirement system and receive a refund of the member's accumulated contributions in accordance with the provisions in 19-20-603, MCA. See also redeposit of contributions previously withdrawn.

written election—a written instrument, required by statute or the rules of the board, properly signed and filed with the board, that contains all the required information, including documentation that the board considers necessary.

TRS Glossary of Terms

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z

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