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Definition of salary

Minnesota Statute Section 354.05, subd. 35 governs the calculation of TRA-eligible salary. A member may be compensated in many different ways for services provided to an employer. However, certain types of compensation may not be considered TRA-covered salary for the calculation of pension benefits.

The proper reporting of your eligible salary is a key component in the determination of your initial retirement benefit. The purpose for the very detailed definition of eligible salary is to ensure retirement benefits are accurately calculated and no member receives higher benefits at retirement than allowed under the law.

Minnesota Statute Section 354.05, subd. 35 excludes certain items of compensation from TRA-eligible salary. In general, employer-paid benefits are not considered TRA-eligible salary. These items include, as defined by statute, “Employer-paid amounts used by an employee toward the cost of insurance coverage, employer-paid fringe benefits, flexible spending accounts, cafeteria plans, health care expense accounts, day care expenses, or any payments in lieu of any employer-paid group insurance coverage, including the difference between single and family rates that may be paid to a member with single coverage and certain amounts determined by the executive director to be ineligible.”

Another significant item of compensation excluded from TRA-eligible salary includes severance payments. Severance payments include, but are not limited to compensation related to a decision by the employee to terminate employment and any payment that is not clearly for the performance of teaching services. This type of payment should not be reported to TRA as salary by your employer.

Compensation items excluded from TRA-eligible salary should not have TRA retirement contributions applied. If you believe your employer has taken retirement contributions on compensation ineligible for TRA coverage, please contact your employer and TRA immediately.

 

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