TRS outlines timeline for first pension check, AAI election and excess contribution refunds

A TRS staff member presented an overview of the retirement claim timeline and what new retirees should expect between their last day of work and the arrival of the first pension payment. The presentation covered required and optional forms, employer reporting, the accelerated annual increase (AAI) election for tier 1 members, and several types of excess contribution refunds.

The TRS presenter said retirees must submit their retirement application and (recommended) direct-deposit depository agreement, and that employers must submit two required electronic forms after the member’s final day: the supplementary report (final pay, days worked, sick leave) and the sick-leave granting certification. TRS will not act on a claim until those employer forms arrive and any outstanding balances for optional service credit or the “2.2 upgrade” are settled or arranged for repayment.

After all required forms and payments are received, TRS begins processing. For most claimants the first pension check is issued roughly 60 to 90 days from the receipt of the final required form or payment; for tier 1 members who elect AAI, the clock starts when TRS receives the signed paper AAI election form. TRS said the AAI election form requires an actual signature and is irrevocable.

The presenter described several excess contribution refunds that may be mailed after claims are processed, including refunds tied to 2.2 upgrade payments, the early retirement option (ERO) sunset refund, and refunds of the 1% survivor benefit contributions for members who certified no eligible dependents on their application. TRS said each separate refund is paid as its own claim and will be mailed as a paper check; each paid claim generates its own 1099-R tax form.

TRS noted AAI lump sums are typically large (the presenter estimated an average around $150,000) and are paid as a separate claim, usually taking an additional 8 to 12 weeks to issue after the notification of first payment. Retirees may choose a direct rollover (no immediate withholding) or a taxable distribution (20% federal withholding required when paid to the retiree). The presenter advised considering rollover options (TRS supplemental savings plan, 457(b), 403(b), IRA) to avoid immediate taxation.

The presentation closed with a reminder that once a member has met processing requirements and TRS has requested the first benefit payroll from the Office of the Comptroller, TRS will send a Notification of First Payment letter by U.S. mail specifying the payment date and the service period that payment covers.