Retirement
Teachers' Retirement System (TRS) Plan 3


About TRS 3

TRS 3 is a two-part (hybrid) retirement savings plan that provides a secure formula based income, and also allows you to invest your own contributions to accumulate a cash balance for retirement.

The Department of Retirement Systems (DRS) provides detailed plan information in the TRS Plan 3 Member Handbook. Below are plan highlights you should know.

TRS 3 includes these two benefit components:

PART 1: An employer-funded defined benefit

WWU contributes to your retirement by funding the defined benefit portion of TRS 3. Contributions are based on a percentage of your salary. The contribution rate is determined each year by the state legislature. Contributions are invested in the TRS Plan 3 Retirement Trust Fund to pay future benefits, and cannot be withdrawn.

PART 2: An employee-funded defined contribution

The defined contribution component of TRS 3 is funded entirely on your contributions, the investment earnings on those contributions, and, if an annuity is taken, the age at which you decide to take payment. You select from the contribution rate options available and can elect to self-direct your own investments or choose to have your account managed by the Washington State Investment Board.

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Making Your Plan Decision

Choosing a retirement plan is an important financial decision. To make the best choice you will need to carefully consider your individual situation, including such factors as:

  • At what age do you want to retire?
  • Do you plan to continue working at WWU or another TRS eligible public employer until you reach that retirement age?
  • How much income will you need in retirement?
  • Do you have other financial resources or retirement savings in an IRA, 403(b), or 457 plan that can supplement your TRS benefit?
  • Can you afford the additional deduction for TRS 3? Once your contribution rate option has been established, it can only be changed when you change employers or during contribution rate flexibility periods each January as permitted by the Internal Revenue Service (IRS).
  • Would you be able to achieve the same or greater level of retirement income if you have the option to participate in TRS 2 and contributing additional funds to the Voluntary Investment Program (VIP) or the Deferred Compensation Program (DCP)?

After you've thought about your personal situation, research your options:

  • Estimate your retirement benefit. Use financial modeling software to project your benefit under TRS 3. This software allows you to enter your own personal data to project retirement savings based on a variety of factors, including your contribution level and expected rate of return.
  • Gain further plan and investment education. TRS 3 members will need to make decisions about how their contributions to the plan are invested. To learn more about the investment options under TRS 3 and some general principles of investing, plan to attend a TRS 3 Investment Education seminar. Seminars are held in a variety of locations throughout the state. Check the DRS website..
  • Telephone Support Center and E-mail: Questions about TRS 3 can be directed to 1-888-711-8773 or e-mail trshelp@icmarc.org. (Multilingual assistance is available.)

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Earning Service Credit in TRS 3

TRS 3 benefits are based on a formula—see "Calculating Your TRS 3 Retirement Benefits" below. Key to that formula is earning "service credit" for the time you are enrolled in TRS 3. It is based on the number of hours you work. There are two ways to earn service credit: month by month, or over an annual basis.

Month by Month

Month-by-month service credit is earned according to the hours you work. See "How

  • Up to 69.9 hours = 1/4 month of service credit
  • 70 to 89.9 hours = 1/2 month of service credit
  • 90 hours and up = one full month of service credit

At WWU, to obtain one full month of service credit in each of the 12 months, the minimum salaried appointment is 56.25%.

 

Annual Basis

Alternatively, when you work for an institution of higher learning such as WWU, you may receive 12 service credit months for the "school year" (i.e., September 1–August 31) if you:

  • Begin working in September in an eligible position; and
  • Earn compensation during at least nine months of the school year; and
  • Have at least 810 hours of compensated employment during the period September 1–August 31.

You may receive six service credit months for each school year if you:

  • Begin working in September in an eligible position; and
  • Earn compensation during at least nine months of the school year; and
  • Have at least 630 hours, but fewer than 810 hours, of compensated employment during the school year.

Note: If you earn compensation in fewer than nine months of the school year, you will receive service credit based on the number of hours compensated each month.

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Calculating Your TRS 3 Retirement Benefits

In a defined benefit retirement plan, the eventual retirement benefit is calculated using a pre-determined formula and is not related to the amount of money paid into the plan. In TRS 3 the WWU contribution funds the defined benefit. The formula for TRS 3 benefit is:

1% x years of service credit x average final compensation

Once you begin drawing your defined benefit, both TRS plans provide for a cost of living adjustment (COLA) each July 1, of up to three percent per year. The COLA begins once you have been receiving your defined benefit for one full year.

Calculating the Defined Contribution Portion of Your Plan

The employee contribution to TRS 3 funds a defined contribution plan. In a defined contribution retirement plan, your retirement income will vary depending on how you elect to invest your funds and how those investments perform over time.

Employee contributions to the TRS 3 retirement plan:

  • are based on a choice of rate options* selected by the participant, and
  • are mandatory, once selected by the employee.

*Note that under current federal law, once you select a contribution rate, it can only be changed when you change employers or during contribution rate flexibility periods each January as permitted by the Internal Revenue Service (IRS). Changing employers means working someplace other than WWU, not just changing departments or divisions within WWU.

The defined contribution component of TRS 3 is based entirely on your contributions, the investment earnings on those contributions, and, if an annuity is taken, the age at which you decide to take payment. If you end employment at WWU and withdraw your contributions, you still have a right to the employer-funded defined benefit component if you have attained at least five years of service credit.

Current Contribution Options:

Option A:
5% of pay at all ages*

Option B:
5% of pay up to age 35; then
6% from age 35 up to 45; and then
7.5% age 45 and above

Option C:
6% of pay up to age 35; then
7.5% from age 35 up to 45; and then
8.5% from age 45 and above

Option D:
7% of pay at all ages

Option E:
10% of pay at all ages

Option F:
15% of pay at all ages

*Option A is the mandatory default rate for those who do not choose a contribution rate.

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Enrolling in TRS 3

  1. Complete the TRS enrollment form.
  2. Print, sign, and send your enrollment form to: WWU Benefits Office, MS 9054
  3. You can verify that your form has been received by checking your enrollment status approximately 3 to 5 business days after returning the forms to the WWU Benefits Office.
  4. You should keep your beneficiary designation up to date by contacting the Department of Retirement Systems (DRS).

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Leaving the University before Retirement

Defined Benefit: If you leave the University before retirement you may delay receiving your defined benefit until a later date. Members who have at least 20 service credit years and who leave the University prior to age 65 have the value of their defined plan prorated. TRS 3 provides an average three percent adjustment for inflation per year until you begin collecting your benefit (or until age 65, whichever is earliest).

Defined Contribution: You can access your defined contribution account whenever you separate from all TRS-covered employment service. Withdrawing money from the defined contribution portion of TRS 3 does not affect your eligibility to receive a monthly pension benefit under the defined benefit portion of the plan.

Withdrawn contributions and earnings are subject to income taxation in the year they are withdrawn. In addition, if you are under age 59 1/2 (or age 55 and retired) you may be subject to an IRS penalty for early withdrawal from a retirement plan.

If you withdraw your contributions before retirement, you lose your right to future retirement benefits. You can restore your contributions and re-establish your benefits under certain circumstances. Explore the TRS website for more information including member publications.

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Retiring from WWU

See Retiring Under TRS 3 Rules.

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Additional Information

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Page Updated 10.24.2013