When calculating and paying retirement benefits, Georgia law and Internal Revenue Service (IRS) regulations place certain limitations on salary earned, salary increases received, and retirement payments received.
Salary Increase Limitations for Your Retirement Benefit Calculation
If your TRS date of membership is prior to 7/1/1984, you may skip this section, as it is not applicable to you.
If your TRS date of membership is on or after 7/1/1984, Georgia law limits the amount of salary increases that can be used to calculate a retirement benefit. The salary limitation is determined annually and is based on the appropriations granted for salary increases by the Georgia General Assembly, or the Board of Regents, plus 2.5%.
When applying the salary limitation in a retirement benefit calculation, first your highest twenty four consecutive months of salary is determined. Then a “base year” is set, which is the year immediately prior to your highest twenty four consecutive months of salary. The first twelve consecutive months of salary is compared to the base year salary. If the increase between the base year salary the first twelve months of salary is more than the law allows, the salary used for computing your retirement is adjusted to the allowable limit. Once adjusted, second twelve months of salary is then compared to the first twelve months of salary and adjusted if necessary to comply with Georgia law. If your salary increases are within the limits, no adjustment is necessary to the salaries used to compute your benefit.
IRS Earnable Compensation and Retirement Benefit Limitations
If your TRS date of membership is prior to 7/1/1996, you may skip this section as it is not applicable to you.
If your TRS date of membership is on or after 7/1/1996, there is a limit on compensation for you that can be reported to TRS. Section 415(b) of IRS code places a limit on contributions allowed under a qualified retirement plan. This amount is determined yearly by the IRS, and once your compensation for the “plan year” reaches that limit, your account remains active, but your employer can no longer report contributions to TRS for you. A plan year is the fiscal year July 1 to June 30. For the plan year 7/1/2019 to 7/1/2020, the limit is $280,000.
In addition, if your TRS date of membership is on or after 7/1/1996, Section 415(b) of IRS code also limits the retirement benefit you may receive in a calendar year. This limit is set yearly by the IRS. For calendar year 2019, the limit is $225,000.