This article appeared in the Spring 2016 edition of The Classroom Teacher.

I may need to leave the classroom for a year or two — how is that going to affect my retirement?

Many school employees take a mid-career break for a variety of reasons: physical or mental health issues, maternity leave, caring for a relative, a move to another area, or sometimes just to take a break and evaluate whether to continue in the profession. Regardless of the reason, there will be decisions to make and some very important issues to consider.

Don’t pull your money out of TRS if it’s not absolutely necessary.

One of the most potentially harmful decisions school employees make is taking their money out of TRS. The temptation is understandable because it can be so difficult to save money on a teacher’s pay. But more often than not, this is a costly mistake, for multiple reasons.

Your retirement eligibility may change.

When you return to school employment and start contributing to TRS again after withdrawing your money, you are treated as a new member of the system even if you buy back the credit you withdrew. If you had been “grandfathered” into previous retirement eligibility laws, you lose that exemption and will be subject to stricter retirement criteria.

Example: Employees who had at least five years of service credit in TRS by the end of August 2014 were exempted from the new law that requires employees to be at least age 62 at retirement to receive full benefits. Employees hired after that date – or those who withdrew their TRS funds and returned after that date – are subject to the age 62 requirement. There are other laws and grandfather provisions that this applies to as well, depending on your age and years of service as of certain dates. If you’re still considering taking out your money, talk to a TRS counselor about the implications on your eligibility both for full retirement benefits and for access to TRS-Care (retiree health insurance).

Buying back the credit is expensive.

If you plan to return to school employment and eventually retire through TRS, you will need to buy back those years of credit you withdrew if you want them to count toward your retirement eligibility and your benefit calculation. And it’s going to cost you more than you took out. TRS will require you to pay the amount of your withdrawn contributions and interest, plus an 8 percent fee, compounded annually from the time of the withdrawal to the time of repurchase. So the sooner you buy the credit back, the less expensive it will be.

If you leave mid-year, make sure you get in your 90 days.

Most teachers are at least vaguely aware that they can stop working after a half-year and receive a full year of TRS credit. But the rules have changed in recent years and a misstep can mean you don’t get the credit you expected. 

Unless you’re in your final year before retirement, you will need to work for 90 days in a school year, with that count beginning on Sept. 1, in order to get credit for the year. For most teachers, this means working several days into the spring semester, rather than getting to leave during the winter break.

The 90 days do not need to be consecutive, so another option is to work the fall semester, not return for the spring semester, but come back and work the necessary number of additional days later in the same school year, or in summer school. The key point is that you must work 90 days between Sept. 1 and the following Aug. 31 to earn credit for the year. Substitute service counts IF you contact TRS and establish those days — which may require payment since most likely neither you nor the district paid the normal TRS contributions for those days.

Above all, talk to TRS about your plans — before you make any irrevocable decisions — to make sure that your break does not have an unexpected effect on your retirement and health care eligibility. TRS benefits counselors are available at 1-800-223-8778.