TRS 3 is a two-part (hybrid) retirement savings plan that provides a secure formula based income, and also allows you to invest your own contributions to accumulate a cash balance for retirement.
The Department of Retirement Systems (DRS) provides detailed plan information in the TRS Plan 3 Member Handbook. Below are plan highlights you should know.
TRS 3 includes these two benefit components:
The UW contributes to your retirement by funding the defined benefit portion of TRS 3. Contributions are based on a percentage of your salary. The contribution rate is determined each year by the state legislature. Contributions are invested in the TRS Plan 3 Retirement Trust Fund to pay future benefits, and cannot be withdrawn.
The defined contribution component of TRS 3 is funded entirely on your contributions, the investment earnings on those contributions, and, if an annuity is taken, the age at which you decide to take payment. You select from the contribution rate options available and can elect to self-direct your own investments or choose to have your account managed by the Washington State Investment Board.
Choosing a retirement plan is an important financial decision. To make the best choice you will need to carefully consider your individual situation, including such factors as:
After you've thought about your personal situation, research your options:
TRS 3 benefits are based on a formula—see "Calculating Your TRS 3 Retirement Benefits" below. Key to that formula is earning "service credit" for the time you are enrolled in TRS 3. It is based on the number of hours you work. There are two ways to earn service credit: month by month, or over an annual basis.
Month-by-month service credit is earned according to the hours you work. See "How
At the UW, to obtain one full month of service credit in each of the 12 months, the minimum salaried appointment is 56.25%.
Alternatively, when you work for an institution of higher learning such as UW, you may receive 12 service credit months for the "school year" (i.e., September 1–August 31) if you:
You may receive six service credit months for each school year if you:
Note: If you earn compensation in fewer than nine months of the school year, you will receive service credit based on the number of hours compensated each month.
In a defined benefit retirement plan, the eventual retirement benefit is calculated using a pre-determined formula and is not related to the amount of money paid into the plan. In TRS 3 the UW contribution funds the defined benefit. The formula for TRS 3 benefit is:
1% x years of service credit x average final compensation
Once you begin drawing your defined benefit, both TRS plans provide for a cost of living adjustment (COLA) each July 1, of up to three percent per year. The COLA begins once you have been receiving your defined benefit for one full year.
The employee contribution to TRS 3 funds a defined contribution plan. In a defined contribution retirement plan, your retirement income will vary depending on how you elect to invest your funds and how those investments perform over time.
Employee contributions to the TRS 3 retirement plan:
*Note that under current TRS 3 plan rules, once you select a contribution rate, it can only be changed under one of two conditions:
The defined contribution component of TRS 3 is based entirely on your contributions, the investment earnings on those contributions, and, if an annuity is taken, the age at which you decide to take payment. If you end employment at the UW and withdraw your contributions, you still have a right to the employer-funded defined benefit component if you have attained at least five years of service credit.
5% of pay at all ages*
5% of pay up to age 35; then
6% from age 35 up to 45; and then
7.5% age 45 and above
6% of pay up to age 35; then
7.5% from age 35 up to 45; and then
8.5% from age 45 and above
7% of pay at all ages
10% of pay at all ages
15% of pay at all ages
*Option A is the mandatory default rate for those who do not choose a contribution rate.
**Note that DRS has provided the following notice regarding this plan change:
" DRS submitted the PERS, SERS and TRS plans to the IRS for qualification in 2009 and the IRS has ruled that it would not qualify TRS Plan 3 unless the rate flexibility currently offered to TRS Plan 3 members is removed. In response to this provisional IRS plan qualification, the Legislature's Select Committee on Pension Policy has sponsored a bill for the 2014 legislative session that makes the necessary changes to Plan 3 laws to remain a qualified plan. Under the provisions of this proposed legislation, TRS Plan 3 members have January of 2014 and one last opportunity in January 2015 to select a new contribution rate option. After January of 2015, TRS Plan 3 members would only be able to change their rate when they change employers."
Defined Benefit: If you leave the University before retirement you may delay receiving your defined benefit until a later date. Members who have at least 20 service credit years and who leave the University prior to age 65 have the value of their defined plan prorated. TRS 3 provides an average three percent adjustment for inflation per year until you begin collecting your benefit (or until age 65, whichever is earliest).
Defined Contribution: You can access your defined contribution account whenever you separate from all TRS-covered employment service. Withdrawing money from the defined contribution portion of TRS 3 does not affect your eligibility to receive a monthly pension benefit under the defined benefit portion of the plan.
Withdrawn contributions and earnings are subject to income taxation in the year they are withdrawn. In addition, if you are under age 59 1/2 (or age 55 and retired) you may be subject to an IRS penalty for early withdrawal from a retirement plan.
If you withdraw your contributions before retirement, you lose your right to future retirement benefits. You can restore your contributions and re-establish your benefits under certain circumstances. Explore the TRS website for more information including member publications.
Disclaimer: If there are any discrepancies between this document and the provisions of the UWRP Plan Document or TRS statutes, the Plan Document or statue will prevail.