Salary Limitation


When calculating retirement benefits, Georgia law and IRS code place certain limitations on salary earned and salary increases received.

Salary Contribution Limits

Section 415 of the Internal Revenue Code (IRS) limits the benefits and contributions allowed under a qualified retirement plan.  Effective July 1, 2015, for TRS members whose current date of membership is on or after July 1, 1996, the maximum earnable compensation for which TRS contributions can be reported or which can be used to calculate a retirement benefit will be $265,000.00.  This limitation is based on TRS’ plan year (July 1, 2015 - June 30, 2016) and not a calendar year.  TRS’ plan year begins July 1st and ends June 30th.  The plan year for the Board of Regents ORP begins January 1st of each year.

Salary Increase Limitations for Benefit Calculations

Effective January 1, 2015, the IRS limitation on the annual benefit received under a defined benefit plan is $210,000.  This limitation is based on a calendar year and not the TRS plan year.  For information on annual benefit payments exceeding this IRS limitation, please contact our office.

Additionally, Georgia law limits the amount of salary increases that can be used to calculate retirement benefits for TRS members whose current date of membership is on or after July 1, 1984.  The salary limitation is determined annually and is based on the appropriations granted for salary increases by the Georgia General Assembly, plus 2.5%.

When applying the salary limitation, TRS determines the member’s 2 highest consecutive years of salary based on membership service and a base year.  The base year is the year prior to the first of the 2 years of salary that will be used in the benefit calculation.  TRS compares the 1st year of the salary to the base year salary.  If the increase between the base year salary and the reported salary for the 1st year is more than the law allows, the salary used for computing your retirement is adjusted to the allowable limit.  Once adjusted, the 2nd year of salary is then compared to the 1st year of salary and adjusted if necessary to comply with Georgia law.  If your salary increases are within the limits, no adjustment to the salaries used to compute your benefit is necessary.

In its annual meeting held May 28, 2014, the Board of Trustees adopted the following maximum salary increases for FY 2015 that can be used by TRS to compute a member's highest 2-year average salary:

Employees of Board of Regents

3.50%

(1.00% + 2.50%)

All Others

4.34%

(1.84% + 2.50%)

 

Social Security Offset