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Understanding TRS and Social Security: A Guide for Texas Teachers

Understanding TRS and Social Security: A Guide for Texas Teachers

July 10, 2023

If you’re a Texas teacher, it’s crucial to familiarize yourself with TRS (Teacher Retirement System of Texas) and its relationship with Social Security. Depending on your work history, your TRS benefits may reduce the amount of Social Security benefits you are eligible for.

TRS provides retirement, disability, and survivor benefits to eligible public education employees in Texas, while Social Security provides retirement, disability, and survivor benefits to eligible workers in the United States. The benefits offered by TRSs include traditional defined-benefit pensions and defined-contribution plans including 403(b) plans, which resemble 401(k)s.

If you are a Texas teacher eligible for both TRS and Social Security benefits, it is essential to understand how the two plans work together and how they may impact your retirement income. In this blog post, we will explore some key considerations for Texas teachers regarding TRS and Social Security.

You are automatically enrolled in TRS on your first day of eligible employment.  You'll be eligible for TRS once you start working in a position that requires a minimum of 15-20 hours of work a week for at least four-and-a-half months or if a public postsecondary school employs you for more than one semester.

State law dictates the contribution percentage that your district is required to deduct from your compensation. These contributions are made on a pre-tax basis, so they will decrease your taxable income for the year. Your participation in TRS cannot be waived.

It’s important to note that in the 1970s and 80s, there were laws passed that modified Social Security to prevent people from receiving both a Social Security benefit and a pension from a job where they did not pay into the Social Security system. The results of these amendments are two rules that could impact your ability to claim your full Social Security benefit as a teacher: The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). 

The Windfall Elimination Provision (WEP) applies to any Social Security benefit you would be entitled to based on your own work record. The Government Pension Offset (GPO) applies to any Social Security benefit you would be entitled to based on a spouse (or ex-spouses) work record.

These provisions reduce (or in some cases remove) benefits for those who worked in a job in which they:

  1. Qualified for a pension and
  2. Did not pay Social Security taxes

This is not limited to teachers. Other professions that often fall into this group include public sector workers like firefighters, police officers and numerous other state, county and local employees. To learn more about these rules follow this link.

For those who held public sector jobs (that did not pay into Social Security) and also worked in the private sector, the Windfall Elimination Provision (WEP) may reduce the Social Security benefit amount reflected on your Social Security statement. Keep in mind that the WEP cannot cut your Social Security payment by more than half of the amount of your monthly pension, and it cannot zero out your retirement benefit. 

A question we often get is about spousal privileges and how retirement funds work when you are married. Below is an example we like to share that explains the breakdown of how this works under the Government Pension Offset:

Sharon is married to Bill. Since they are married, Sharon is eligible for one-half of Bill’s Social Security if he is still living, and 100% of the social security benefit if he has passed. However, if Sharon is receiving TRS, Social Security will subtract two-thirds of her TRS from the spousal benefit.

So, if Sharon’s TRS benefit is $600, two-thirds of that, or $400, must be deducted from her spousal benefit under Social Security.

Be aware that under the GPO, it is possible that your spousal and/or widow’s benefit could be eliminated, depending on your TRS monthly benefit amount.

If you’re interested in learning how much of a savings opportunity TRS could be for you and your family, click this link to create your own estimate of retirement benefits. If you’d like some help determining how the Windfall Elimination Provision or the Government Pension Offset impacts your benefits, feel free to contact us to set up a consultation with our to our in-house Social Security expert, Savara McDaniel.