Unit A and B Members
The Massachusetts Teachers’ Retirement System is a contributory retirement system governed by the Commonwealth’s retirement law, Chapter 32 of the Massachusetts General Laws. The MTRS, which is the second largest of the Commonwealth’s 106 contributory retirement systems, provides retirement, disability and survivor benefits to Massachusetts teachers, administrators and their families.
What requirements must I meet in order to become a member of the Massachusetts Teachers’ Retirement System?
You are eligible to join the MTRS if you are employed as a teacher or administrator in a Massachusetts public school and (a) a contractual agreement regarding your employment covers you; (b) you are employed on at least a half-time basis; (c) you are certified by the Board of Education; and, (d) your contractual agreement requires that you be certified by the Board of Education as a condition of your employment.
Do I have to become a member of the MTRS?
If you meet the eligibility requirements stated above, yes.
Who manages the investment fund?
The Pension Reserves Investment Trust (a pooled investment fund established to invest the pension reserve assets of the Massachusetts State Employees’ and Teachers’ Retirement Systems) is managed by the Pension Reserves Investment Management Board.
What happens to my MTRS annuity savings account if I quit teaching?
Depending on your age and amount of creditable service when you leave active service, you may have a choice of (a) receiving a refund of your account, (b) leaving your funds on account with the MTRS, or (c) applying for a retirement allowance.
What types of retirement benefits does the MTRS provide?
There are 3 types of retirement benefits for which you may apply: (a) superannuation—the most common service retirement, (b) termination, (c) disability, of two types—ordinary and accidental.
Instead of receiving a retirement allowance, can I receive a refund of my contributions and interest?
Yes—you may receive a refund if you have officially resigned from your position and will not be re-employed by a Massachusetts public employer (in other words, you will not be employed in a position requiring membership in a Massachusetts contributory retirement system).
How and when do I file for retirement?
To retire, you must file an application for retirement with the MTRS—notifying your school district of your intent to retire does not begin any paperwork with MTRS. You may file your application up to four months before your retirement date. If your application is received within 60 days after your date of termination of service, your retirement can take effect on your termination date. If, however, you file more than 60 days after your date of termination of service, your benefits will not be retroactive to that date; the earliest they may then begin is 15 days after MTRS receives your application.
Do I have to retire at the end of the school year?
No—you may choose any day of the year as your effective date of retirement. However, if you choose to retire at the end of a school year and your school year ends in June, your retirement date will take effect on June 30, a date set by MTRS regulation.
What is my retirement benefit based on?
Except for accidental disability and termination retirement benefits, your retirement benefit is based on the following factors:
- Your age on your date of retirement. If your birthday is January 1, and you are retiring on June 30, your age factor will be based on your age as of your last birthday. MTRS does not round up your age when determining an age factor. If you are age 65, you have reached the maximum age factor; the age factor does not increase after age 65.
- Your years of creditable service. This is the total number of years of creditable service you have accrued in the MTRS
- The average of your highest three consecutive years’ salaries. Your salary average is based on your three highest consecutive years’ salaries or your last three years’ salaries.
My spouse is also a member of a Massachusetts contributory retirement system. Does this affect our retirement eligibility in any way?
Yes—when a husband and wife are both members of the same or different Massachusetts contributory retirement systems and one of the two members is retired, the other member may be eligible to retire—under a superannuation retirement allowance—even though he or she has not yet attained age 55. However, if you became a member of the MTRS on or after January 1, 1978, you must have a minimum of 10 years of creditable service to apply for a superannuation retirement allowance.
If I change my mind, can I withdraw my application for retirement?
Yes—you may withdraw your application any time before midnight of your date of retirement. To do this, you must file a written request with the MTRS to rescind your retirement application. After your date of retirement, you may not withdraw your application.
How soon after my retirement date will I receive my first monthly payment?
If you have filed your application for retirement at least 3 months before your date of retirement, you will receive your first payment at the end of the first full month following your date of retirement. For example, if you retire effective November 3, you will receive your first payment—which will be retroactive to November 3—at the end of December. If you are retiring under RetirementPlus, however, your first payment may be delayed until MTRS receives your school’s payroll deduction payment.
What constitutes “creditable service” and can I receive credit for earlier teaching and public service?
“Creditable service” is a time that you have worked as a teacher, administrator or other Massachusetts public employee, and for which you have paid or transferred retirement contributions to the MTRS. Creditable service also includes certain military service. You may be able to purchase credit for prior substitute teaching, teaching in an out-of-state public school, certain non-public school teaching, other Massachusetts public service and active military service. Also, if you withdrew your retirement account from the MTRS or any other Massachusetts contributory retirement system, you may receive creditable service if you repay the amount withdrawn plus interest, prior to your date of retirement.
Is all creditable service equal?
To the extent that you have, for example, two years of Massachusetts teaching service and two years of out-of-state service that you have purchased, yes—each counts as two years of creditable service. However, MTRS also distinguishes between membership and non-membership service. What is a membership service?
Membership service is service that required your membership in the MTRS and during which you contributed to the MTRS via payroll deduction.
What is a non-membership service?
Non-membership service is that does not require your membership in the MTRS, but is eligible for purchase. Types of non-membership service are: substitute teaching service in a Massachusetts public school; out-of-state public school teaching; non-public school teaching; other Massachusetts public employment; military service; and, pre-1975 maternity leave and teaching service in an overseas school for dependents sponsored by the U.S. Department of Defense.
Why does MTRS distinguish between membership and non-membership service?
MTRS distinguishes between membership and non-membership service for the purpose of crediting part-time Massachusetts teaching service during which you contributed to the MTRS via payroll deduction.
How much does it cost to purchase past service?
The cost of purchasing past service is based on what you would have paid in contributions during that period (plus interest to date) or what you actually paid and withdrew (plus interest to date).
Is it always a good idea to purchase past creditable service?
Often, but not always—depending on how much creditable service you already have, it may or may not make financial sense for you to purchase outstanding service. If, based on your established creditable service and age, you are not at or near the maximum retirement allowance—80 percent of the average of your highest three consecutive years’ salaries—then, depending on how much outstanding service you have, purchasing it may result in a meaningful increase in your retirement allowance. While the present cost of purchasing the service may seem substantial, the difference in your retirement allowance may allow you to recoup the expense in a short period of time and pay off in the long run. If, however, you are already eligible to receive the maximum retirement allowance (80 percent of the average of your highest three consecutive years’ salaries) by reason of your established creditable service and age, then purchasing outstanding service will be an expense that will not result in an increase in your retirement allowance.
When must I purchase creditable service?
You must purchase creditable service before the effective date of your retirement. If you wish to purchase out-of-state, overseas dependent school, non-public school teaching service or military service credit, you must do so while you are an active member of the MTRS or while you are on an authorized leave of absence. If you wish to purchase past Massachusetts public school substitute, temporary or part-time teaching service or other Massachusetts public service, you must do so prior to your date of retirement. Because an interest charge is added to the amount due, the cost of purchasing creditable service increases monthly.
Why don’t I pay into Social Security?
When Social Security was enacted in 1935, it specifically excluded public employees who were covered by their own pension systems. Massachusetts is one of a handful of “non-Social Security” states, which means that you pay into MTRS instead of Social Security; you do not earn any Social Security “credits” or “quarters” for your MTRS contributions or service. However, if you earned Social Security credits through other employment and you will be eligible for Social Security benefits based on your other employment history or your spouse’s eligibility, your Social Security pension may be reduced pursuant to the IRS’s Government Pension Offset or Windfall Elimination Provision.
How much am I required to contribute?
You are required to contribute a set percentage of your salary through regular payroll deductions. Your contribution rate is established by the Commonwealth’s retirement law and is determined by the date you start working as a public employee in Massachusetts.
If I was formerly a member of a Massachusetts contributory retirement system and I withdrew my funds, can I now “buy back” that service and enter the MTRS at my earlier—and lower—contribution rate?
No. While you may “buy back” that time in order to increase the total amount of your creditable service, your buy-back does not entitle you to your earlier contribution rate. You may purchase service time only, not the benefit of the lower rate.
Why do I have to pay a 1.45% Medicare tax?
If you were hired on or after April 1, 1986, you are required to pay a 1.45% Medicare tax. While this does not earn you any Social Security “credits,” it does entitle you to Medicare coverage at age 65 if you have paid this tax for at least 10 years.
I am participating in RetirementPlus. What does this mean for my retirement benefits?
If you are participating in RetirementPlus—because you either elected to participate or you became a member of the MTRS on or after July 1, 2001— you will be eligible to receive a RetirementPlus enhanced benefit if, at the time of your retirement, you (a) have accrued 30 or more years of creditable service, at least 20 of which are teaching service with the MTRS, and, (b) have contributed at the RetirementPlus rate of 11% for at least five years, or have made accelerated payments to meet this contribution requirement.
Under RetirementPlus, what if I don’t accumulate 30 years of creditable service by my date of retirement?
If you do not accumulate 30 years of creditable service by your date of retirement, you will receive a retirement benefit calculated under the regular formula. Members who elected to participate in RetirementPlus will also receive a refund of their RetirementPlus contributions, plus regular interest; however, members who were required to participate in RetirementPlus will not receive a refund of any portion of these contributions.
Under RetirementPlus, what if I retire with 30 or more years of creditable service, but fewer than 20 of my years are as a member of the MTRS?
If you retire with 30 or more years of creditable service, but fewer than 20 of your years are as a member of the MTRS, you will forfeit your additional contributions and receive only the regular retirement benefit.
I am not participating in RetirementPlus because I elected not to participate (or I didn’t submit a timely election form). Can I elect it now?
No—your election opportunity was a one-time chance. Once you elect not to participate (or, in the case of members who are transferring into the MTRS from another Massachusetts contributory retirement system, miss your 180-day deadline for submitting your form), you cannot later opt-in. If, however, you leave MTRS service, take a refund of your annuity savings account and then return to MTRS service, you will return as a new member and automatically be subject to RetirementPlus and the contribution rate of 11%.
I moved. What should I do?
It is very important that you notify Payroll when your address changes because MTRS receives this information from your employer. If it’s wrong with your employer, it will be wrong with MTRS — and you won’t receive our newsletters or important announcements.
What happens to the money that I contribute to the system?
Your school district forwards your contributions to MTRS and it establishes and maintains annuity savings account on your behalf for your retirement. Your MTRS annuity savings account consists of two parts: (1) contributions, which are deducted from your paycheck by your school district and (2) interest, which is earned on your prior year’s ending balance and credited at a rate determined annually by the Public Employee Retirement Administration Commission. The rate is equal to an average passbook savings return. Additionally, if you have purchased creditable service, your payments will be included in your annuity savings account balance.
Will I eventually get this money back?
Generally, yes. Depending on what you do in your career and how long you live, you or your survivor will receive all or a portion of your contributions and interest. The funds in your annuity savings account will be paid out to you or your survivor when one of the following occurs: (a) you retire from the MTRS and receive a retirement allowance, or (b) you become an inactive member who is eligible to receive a refund of your money (you leave public service in Massachusetts), or (c) you die while you are an active member, in which case the MTRS will pay a benefit to your survivor.
How do I know how much money I have in my annuity savings account?
In the spring of every year, the MTRS sends a statement of account to all active and inactive members who have a balance in their annuity savings account. This statement reflects personal data (name, address, date of birth, beneficiary designation) as well as financial information regarding any activity in your account, the amounts of after-tax contributions, pre-tax contributions, interest and the total balance in the account as of the end of the previous calendar year. You may request a statement of your annuity savings account balance any time during the year.
What is the difference between after-tax contributions and pre-tax contributions?
The difference is that you have already paid taxes on your after-tax contributions—and therefore you do not have to pay taxes on them again when you receive them in the form of a lump-sum payment or a retirement allowance—but you have not yet paid taxes on your pre-tax contributions and, so, you will have to pay taxes on those when you receive them.
Is the interest on my account considered a pre-tax or an after-tax amount?
All interest is paid on a pre-tax basis; as such, all interest is included in the taxable portion of your annuity savings account balance, which you may need to reference for tax purposes in the event you take a refund of your account.
How do I know what amount is nontaxable and what is taxable?
The MTRS will separate the taxable and non-taxable amounts on your annual statement.
As an active, contributing member, will I have access to the funds in my annuity savings account?
No. Your annuity savings account is not a personal bank account or an individual retirement account. As someone who is actively contributing to the MTRS through regular payroll deductions or who is on an authorized leave of absence, you are not eligible to withdraw any portion of your annuity savings account balance. Likewise, you may not borrow money from your account.
Can the money in my account be assigned to someone else or attached by a third party?
No—you may not assign the funds in your account, nor may your account be garnished or attached by a lien or any other legal or equitable process except by the Internal Revenue Service, the Massachusetts Department of Revenue or, in the event of divorce, pursuant to a Domestic Relations Order (DRO). The funds must remain in your account with the MTRS until you retire, die or become an inactive member who is eligible to receive a refund of the money. Likewise, your retirement allowance is subject to assignment only pursuant to court-ordered child support payments and in divorce cases, domestic relations orders.
Why is the interest rate I earn on my MTRS account lower than the returns generally earned on investments?
This interest rate bears no relationship to the actual return earned on the annuity savings fund; rather, it is an “artificial” rate of interest established by the Public Employee Retirement Administration Commission (PERAC; mass.gov/perac). By law, this rate is determined by the average interest rate paid on individual savings accounts, which is obtained from a representative sample of financial institutions in Massachusetts. The contributions from active members are pooled and invested for the MTRS by the Pension Reserves Investment Management (PRIM) Board in the Pension Reserves Investment Trust (PRIT) Fund. The interest you earn on your balance does not reflect the MTRS fund’s actual investment return. The fund’s excess investment return is transferred to the system’s reserve fund, which ensures the future stability of the system. After individual members’ annuity savings accounts are credited with an interest, the trust account’s “excess earnings” are credited to the MTRS’s pension reserve fund to ensure the pension fund’s stability.
I am participating in RetirementPlus. What types of creditable service count toward the enhanced benefit eligibility requirement of “at least 20 years of membership service with the MTRS (or Boston Retirement System) as a teacher?”
In addition to your regular service during which you contribute to the MTRS via regular payroll deductions, the following two types of purchased service count toward the 20-year “teaching service” requirement: (a) repayment of a refund from the MTRS, and (b) if you began service with an MTRS employer on a temporary or part-time basis, the purchase of your mandatory six-month waiting period. All other types of service do not count toward the 20-year “teaching service” requirement. They do count, however, toward the 30-year creditable service requirement.
Is service rendered as a “consultant” in a school district, or as an “03” employee of the Commonwealth of Massachusetts, eligible for purchase?
No—this type of service continues to be ineligible for purchase.
When will I be eligible to retire from the MTRS?
You are eligible to retire with a regular, superannuation retirement allowance when you: (a) have 20 years of creditable service, regardless of your age, or (b) are at least age 55 and you have at least 10 years of creditable service. If, however, you do not meet either of these requirements and you were a member of the MTRS prior to January 1, 1978, different eligibility requirements may apply to you.
If my position is eliminated due to a reduction in force or if I am terminated, to what benefits am I entitled?
If your position is eliminated or you are terminated for a reason that does not include moral turpitude, you may take a refund of your MTRS annuity savings account. Or, if you have accrued:
- at least 10 years of creditable service, you may leave your funds on account and
- apply for a superannuation retirement allowance upon attaining age 55 or anytime thereafter;
- You may be entitled to a termination retirement allowance for 20 years or more of creditable service.
What happens if I am convicted of a criminal offense?
The law provides certain forfeiture provisions in the event you are convicted of a criminal offense involving your job.
What are the eligibility criteria for a termination retirement allowance?
To be eligible to receive a termination retirement allowance, the following conditions must be met:
- the position you held with your school district must be eliminated or you failed to be reappointed to your position;
- the elimination of your position or your failure to be reappointed must be completely involuntary on your part, and,
- you may not have refused an offer of a comparable position in which you are certified.
How is the amount of a termination allowance calculated?
The termination retirement allowance is equal to 1/3 of the average of your three highest consecutive years’ salaries, plus an annuity amount that is based on your age and account balance at retirement.
How do I apply for a termination retirement allowance?
As soon as possible after you receive formal notice of termination from your school district, contact MTRS for a retirement application. As soon as possible—and, if you want your retirement to become effective on your date of termination, no later than 60 days after your effective date of termination—file your completed application with the MTRS office.
Once my termination retirement allowance becomes effective, can I return to active service as a teacher?
No. Specifically, if your name should appear on a recall list after the approval of your termination retirement allowance, you may not “unretire” and elect to take a teaching position if one is offered to you. Additionally, if you are recalled prior to MTRS approval of your application for a termination retirement allowance, you must immediately notify the MTRS.
How do I apply for a disability retirement allowance?
Because there are many issues involved in the disability retirement application process, it is very important that you speak with an MTRS Disability Case Manager first to be sure that this is an appropriate option for your particular situation.
When am I eligible to take a refund of the money in my MTRS annuity savings account?
You are eligible to take a refund if you have officially resigned from your position and will not be re-employed in a position requiring membership in a Massachusetts contributory retirement system.
When makes me ineligible to take a refund of the money in my MTRS annuity savings account?
You are not eligible to withdraw the balance in your account if you are (a) receiving Workers’ Compensation payments either on a weekly basis or, in the case of a lump-sum settlement, during the period of time over which the lump-sum settlement is allocated; (b) still an active member of the MTRS, on a paid or unpaid leave of absence; or, (c) accepting employment with a public school system or any other political subdivision which requires membership in a Massachusetts contributory retirement system.
What does it mean to take a refund?
When you take a refund:
- Your membership in the MTRS ends, and you give up the service represented by the funds in your account as well as any benefits right based on that service credit.
- You receive a lump-sum payment of your retirement contributions, eligible interest and any payments made to purchase past service or RetirementPlus accelerated contributions—subject to federal tax withholding and penalties, if applicable. You may choose to receive the payment directly, or you may direct MTRS to roll it over to one or more eligible plans, or you may choose some combination of payment to you and roll over.
- If you return to Massachusetts public service after receiving a refund, you will be considered a new employee and will be subject to the contribution rate that is in effect at the time of your re-employment— and not your “old,” possibly lower, contribution rate. You will not be entitled to the creditable service you previously accumulated unless you choose to repay your refund, plus interest, according to the rules established by the retirement board of the contributory retirement system of which you become a member. Repayment of your prior refund will not allow you to return to your “old” contribution rate.
Can I withdraw only a portion of the total in my annuity savings account?
No—MTRS cannot give you a partial refund. MTRS must close out your annuity savings account and pay out the entire balance.
Are there any “hardship” provisions that would allow me to withdraw my money before I terminate my employment?
No—you may only withdraw your account when your Massachusetts public employment is terminated.
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