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Earnings Limitations Savings Account (ELSA)

TRA retirees may return to work in a TRA-covered position and earn up to the earnings limitation without reducing their TRA pension benefit.

The earnings limitation is applied to salary earned on a fiscal year basis (July 1 to June 30).

Note: If you are a MnSCU retiree on the Annuitant Employment Program (AEP), the earnings limitation is $62,000 for the fiscal year. It is not prorated for the first year of retirement or for the year you reach your normal retirement age.

What salary is included?

Any salary you earn from a TRA-covered position is considered earnings after retirement. That means that any position that is normally covered by TRA, for any TRA employer, is reported as annuitant earnings after retirement.

Income from teaching service includes, but is not limited to, all income for services performed as a teacher, administrator, employee of a third-party supplier, consultant or an independent contractor for a TRA-covered employer. Income earned while employed in a position not covered by TRA (e.g., discount store employment, etc.) is not subject to the earnings limitation.

What happens to benefit amount earned over the limit?

Beginning in January of the next year, your benefit payments stop or are reduced until the entire offset amount is put into your earnings limitation savings account (ELSA) (refer to the example on the below).

Your annuity payment is reduced by $1 in for each $2 above the limit.

If you have chosen an accelerated annuity, the pension offset amount is only applied toward the "life" portion of your monthly annuity payment. The accelerated portion of your monthly benefit is considered a term annuity and is unaffected by the ELSA offset process.

What happens when I reach normal retirement age?

Members who have reached Social Security full retirement age are not subject to the earnings limitation. (Refer to the table below to determine your full retirement age.)

In the fiscal year that you reach normal retirement age, you can earn $46,000 between July 1 through the month prior to reaching full retirement age. Once you reach the month of your normal retirement age, you are no longer subject to any limitation.

Does my ELSA account accrue interest?

Money redirected to your ELSA account accrues no interest. Each year, you will receive an Earnings Limitation Savings Account Annual Statement, which is a comprehensive report of your savings plan for each calendar year.

How do I get a refund of my ELSA account?

You may apply for a refund of your ELSA account beginning one year after the last deferred amount was redirected to your ELSA account. No interest is earned on account balances.

An Earnings Limitation Savings Account Refund application must be submitted to TRA. When you request a refund, you will receive the full, eligible amount; partial refunds are not available. You may elect to have all or any portion of your ELSA refund payment rolled over to a traditional IRA or an eligible employer plan.  Although you can also convert your refund to a Roth IRA, some tax implications will apply. You may also elect to receive a lump sum refund, minus applicable taxes. We suggest you consult your personal tax advisor if you have questions about the tax implications. If you choose to receive a lump sum, the distribution will be reported on IRS Form 1099-R as a normal annuity payment.

If you apply for a refund and then return to work, the earnings limit will apply to that reemployment salary as well. You will need to apply for another refund one year after the second period of deduction ends.

Social Security deductions are required from salaries of all TRA retirees (regardless of age) who resume teaching service.  TRA deductions are no longer withheld.

What happens if I die prior to receiving my ELSA refund?

By law, pension benefits are paid in the following order: 

It is very important to keep your beneficiary designation up-to-date.  The beneficiary designation you make for your ELSA account is a separate designation from the beneficiary designation you have made for your retirement account and does not need to be the same.  

Contact TRA to request an Earnings Limitation Savings Account Beneficiary Designation form (TRA-6200).

What is the Social Security Administration definition of normal retirement age (NRA)?

Year of birth NRA
1943 - 1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67 years

The following is an example of how the fiscal year earnings limitation could affect a retiree:

  $66,000 Earnings after retirement
$46,000 Earnings limit
  $20,000 Earnings in excess of the limit
÷ 2     Offset is 1/2 of excess earnings
  $10,000 Pension amount to be offset to ELSA beginning in January of the following year.

This assumes the retiree:

Date
Monthly
Benefit Payment
Transferred to
Savings Account
January 1, 2015
$0
$3,000
February 1, 2015
$0
$3,000
March 1, 2015
$0
$3,000
April 1, 2015
$2,000
$1,000
May 1, 2015
$3,000
$0
June 1, 2015
$3,000
$0
July 1, 2015
$2,000
$0
August 1, 2015
$3,000
$0
September 1, 2015
$3,000
$0
October 1, 2015
$3,000
$0
November 1, 2015
$3,000
$0
December 1, 2015
$3,000
$0
Total
$26,000
$10,000

This individual is first eligible to apply for a refund of the $10,000 that was transferred to the ELSA savings account one year from April 1, 2015.

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