Answers to Common Questions from Retired Tier 2 Members
This brochure was written for members who have been retired for more than one year. It covers some common questions TRS receives from Tier 2 annuitants.
Expect a 1099-R Form
If you received a TRS benefit in the last year, the Office of the Comptroller will mail an IRS Form 1099-R to you by January 31 in the new year. This form will report your income received from TRS during the previous year and the taxable portion of that income.
Box 5 on your 1099R form sometimes causes confusion for members. The text in Box 5 states “employee contributions or insurance premiums.” The monetary amount listed in Box 5 is actually the non-taxable portion of your TRS benefit. It represents the contributions you made as an employee that were already taxed before you retired. If you subtract the taxable income from the gross distribution listed in Box 1, the resulting difference should be the amount in Box 5.
Increases in annuity
Annual cost-of-living increases for members will be calculated using either 3 percent or one-half of the Consumer Price Index as of the preceding September, whichever is less, of the originally granted retirement annuity. If the increase in the Consumer Price Index for the preceding September is zero or there is a decrease, then the annuity will not be increased. When there is an increase, it will not be compounded.
You will receive an annual increase on the Jan. 1 occurring either on or after the attainment of age 67 or the first anniversary of the annuity start date, whichever is later. The increase is effective in January of each year and is reflected in the payment you receive in February. This increases your monthly benefit and is not a separate lump-sum payment.
Some annuitants may receive increases in their annuities prior to the initial post-retirement increase due to minimum annuity legislation. If you are affected, we will notify you.
Follow Post-Retirement Limits
Limits that begin on your first day of retirement
The law suspends your retirement benefits if you accept full-time employment in a position covered by another state of Illinois pension system that has reciprocal rights with TRS.
If you first became a Tier 2 member on or after January 1, 2012, the law suspends your retirement benefit if you accept a contractual position from the same employer from which you retired. Failure to notify TRS and your contractual employer about your retirement status prior to accepting contractual employment may result in a Class A misdemeanor and a fine of $1,000.
Limits after first year of retirement
120 days/600 hours limitation
Following the school year in which you last contributed to TRS, you may be employed in a TRS-covered position for up to 120 paid days or 600 paid hours per school year and still receive a retirement annuity. The 120 days/600 hours limit is in effect through June 30, 2023.
State law does not allow optional TRS participation. You may not avoid TRS reporting by calling yourself an independent contractor, vendor or consultant.
Only work that requires teacher licensure (including summer-school and substitute teaching) is subject to the 120 days/600 hours post-retirement employment limitation. All time that a teacher or administrator is required to be present for licensed duties is subject to the limitation. This includes preparation periods and time before, between, and after classes. For administrators, this includes all time that is required to be spent on administrative duties, such as attendance at board meetings and contract negotiations.
Exceeding the limitations
If you exceed the employment limitations during any school year:
- we must be notified,
- your retirement annuity will be suspended,
- you will re-enter active membership, and
- your employer must remit TRS contributions on all creditable earnings after the employment limitations are exceeded.
Teachers’ Retirement Insurance Program (TRIP)
TRIP is a comprehensive program of quality health care coverage for retired teachers and their eligible dependents. The program offers two types of plans: standard plans and Medicare Advantage (MAPD) plans. Benefit recipients enrolled in TRIP have prescription drug coverage available.
In order to join TRIP, you must be receiving a monthly benefit from TRS and have at least eight years of creditable service.
There are four times when you may enroll in TRIP:
- at retirement,
- when coverage is involuntarily terminated by a former plan,
- when turning the age of 65,
- during an annual Open Enrollment Period.
Annual Open Enrollment Periods are held twice a year. The Benefit Choice Period is held the month of May for enrollment into standard TRIP plans. The Annual TRAIL Open Enrollment Period is held mid-October through mid-November for enrollment into Medicare Advantage (MAPD) plans.
You may enroll dependents when you enroll in the program or when your dependent experiences a Qualified Change in Status (see “Enrollment Periods” above).
Social Security Offsets
TRS will never reduce your TRS benefit because of Social Security benefits. However, the Social Security benefits of many eligible members will be reduced because of public employment not covered by Social Security. Only the SSA can provide this information.
The Windfall Elimination Provision (WEP) may reduce your Social Security benefit based on your record. The Government Pension Offset (GPO) may reduce your Social Security benefit based on your spouse’s record.
You must report changes in your TRS benefits (such as your annual increases) to the SSA because such changes may affect the Social Security amount you receive.
If you are eligible for Social Security coverage on your own work record, you will receive Medicare Part A coverage at age 65. You may have Medicare Part A coverage (hospital insurance) at age 65 if your spouse is at least age 62 and has worked in Social Security-covered employment long enough to be insured, even if your spouse is still working. Anyone may enroll in Medicare Part B (medical insurance); there is no work requirement.
Three months prior to your 65th birth month, contact the SSA and apply for Medicare benefits. The SSA will determine if you are eligible for Medicare. If deemed eligible, the SSA will enroll you into Medicare Parts A and B and mail you a Medicare identification card or award letter with the effective dates of your Medicare coverage.
If you are currently enrolled in TRIP, you must send TRS a copy of your Medicare identification card or Medicare award letter upon receipt. Benefit recipients who enroll in Medicare Parts A and B are required to transition from a standard TRIP plan into a Medicare Advantage (MAPD) plan. Failure to turn in documentation timely may result in a loss of TRIP coverage and additional out of pocket expenses. For additional information on the transition from a standard TRIP plan to a Medicare Advantage (MAPD) plan, telephone the TRS Call Center at 877-927-5877.
Medicare coverage is not reduced in any way because of the WEP or the GPO.
The Member Information and Beneficiary Designation form allows you to designate beneficiaries to whom death benefits will be distributed. You initially completed this form when you became a TRS member. Periodically check your designation, especially if you have changed your marital status. Verify your designation by reviewing it online in the secure member area of the TRS website or by calling us at 877-927-5877 (877-9-ASK-TRS).
For more information about the topics covered in this brochure, please visit our website, www.trsil.org or call us toll free at 877-927-5877 (877-9-ASK-TRS).