TRS explains annual increases, tax reporting and Social Security change

A TRS staff member reviewed benefit-increase schedules for tier 1 and tier 2 members, tax reporting requirements, and recent federal changes affecting Social Security calculations for public employees.

TRS said tier 1 members receive annual increases of 3% compounded on the prior year's benefit beginning the Jan. 1 after the member turns 61 and has been retired at least one year (first increase reflected on the Feb. 1 check). For tier 2 members (public service beginning after Jan. 1, 2011), annual increases are variable: the lesser of 3% of the original benefit or one-half of the Consumer Price Index for the 12 months ending the prior November; increases are determined year to year.

For tier 1 members who elected AAI, TRS said the first annual increase is delayed until after the member turns 67 and has been retired at least one year; those AAI increases are a fixed 1.5% of the original benefit and are paid Jan. 1 each year (reflected Feb. 1).

On taxes, TRS said it mails Form 1099-R information (via the comptroller’s office) to members at the address on file; the presenter noted that separate paid claims (monthly benefit, AAI, 2.2 refund, ERO refund, survivor refund) each generate a separate 1099-R. TRS can withhold state income tax only for a set of surrounding states (Iowa, Indiana, Kentucky, Michigan, Wisconsin) but not for Missouri, and retirees must submit a state withholding form to request state tax withholding.

The presenter also highlighted the Social Security Fairness Act of 2025, which repealed prior provisions that could reduce Social Security benefits for some public employees; TRS advised members to consult Social Security directly for eligibility and benefits because TRS has no access to individual Social Security records.