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Contribution Rates

Coordinated Plan members contribute to Social Security in addition to TRA under a Section 218 agreement. Their TRA benefits are “coordinated” with Social Security and Medicare coverage. All new TRA members belong to the Coordinated Plan. Even if they are exempt from Social Security for any reason they are considered Coordinated members for contribution and benefit purposes.

Basic Plan members are only eligible for Medicare if they qualify under Social Security rules. TRA has very few Basic members who have been contributing annually (or on an approved leave of absence when not teaching) since January 1, 1960, which is required in order to retain Basic coverage. Some community college charter teachers became Basic TRA members after January 1, 1960. In 1989, some Basic members elected to obtain Medicare coverage in addition to Basic coverage.

Contributions are applied as a percent of the member's covered pension salary, as defined by Minnesota Statutes. Contribution rates may only be changed by statute. As of July 1, 2014, the member and employer rate are 7.5 percent (Laws of Minnesota (2010) Chapter 359).

Contributors July 1,
2014

Members: Coordinated Plan

7.50%

Employers: Coordinated Members

7.50%

Employers: Minneapolis Additional

3.64%

Members: Basic Plan

11.00%

Employers: Basic Members

11.50%

Retired TRA members do not have TRA contributions withheld from their salary if they return to work with a TRA-eligible employer after retirement. However, TRA retirees/annuitants are subject to Social Security and Medicare withholding for earnings after retirement.

Historical Contribution Rates

Tax-Sheltered Status

Your TRA contributions are tax-sheltered for federal and state purposes at the time of withholding, but become taxable when received as a retirement benefit or when received as a refund.

TRA is a 501(a) Trust and a “qualified plan” under section 401(a) and 414(d) of the Internal Revenue Code (IRS) code with Section 414(h)(2) employer “pickup” of member contributions. Because of this federal tax status, your membership in TRA could limit or eliminate completely the amount you are allowed to deduct on your federal income tax return for contributions to an Individual Retirement Account (IRA). Please consult with the Internal Revenue Service (IRS) or review the pertinent IRS publications with your personal tax advisor before deducting IRA contributions on your federal income tax return.

All members who have required contributions withheld will have the “pension plan” box checked on Form W-2. TRA contributions were first approved for tax-sheltered status in 1983. The IRS letter of determination reconfirming TRA's 401(a) status has been updated periodically since 1983. The most recent letter of determination was in July 2014.

 

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