Regular retirement overview, factors, tables and worksheet

FAQ
Overview of Options A, B and C
Estimating your allowances under Options A, B and C: Factors, tables and worksheet
The regular retirement application process

FAQ

1)	When will I be eligible to receive a regular retirement allowance from the Massachusetts Teachers’ Retirement System?
2)	Instead of receiving a retirement allowance, can I receive a refund of my contributions and interest?
3)	What constitutes “creditable service” and can I receive credit for earlier teaching and public service?
4)	How much does it cost to purchase past service?
5)	When must I purchase creditable service?
6)	How do I purchase creditable service?
7)	Are veterans entitled to additional benefits?
8)	Is my retirement allowance taxable?
9)	Is there a special benefit when both spouses are members of the same or different Massachusetts contributory retirement systems?
10)	Are there any restrictions on working after I retire?

1) When will I be eligible to receive a regular retirement allowance from the Massachusetts Teachers’ Retirement System?

You will be eligible to receive a regular retirement allowance when you

• have 20 years of creditable service, regardless of your age, or
• are at least age 55 and you have at least 10 years of creditable service.

If you are participating in RetirementPlus, in order to be eligible to receive the enhanced RetirementPlus benefit, you must also have at least 30 years of creditable service, of which 20 years are teaching service with the MTRS or Boston Retirement System.

The Massachusetts Retirement Law (Massachusetts General Laws Chapter 32) regulates your retirement allowance and allows you to choose one of three benefit options. These options differ with regard to the amount paid and whether any benefits will be paid to someone else after your death.

2) Instead of receiving a retirement allowance, can I receive a refund of my contributions and interest?

Yes. You may receive a refund if you have officially resigned from your position and will not be re-employed in a position requiring membership in a Massachusetts contributory retirement system.

However, you are not eligible to withdraw the balance in your account if you are:

• receiving Workers’ Compensation payments either on a weekly basis or, in the case of a lump-sum settlement, during the period of time over which the lump-sum settlement is allocated,
• on a paid or unpaid leave of absence or
• accepting employment with a public school system or any other political subdivision which requires membership in a Massachusetts contributory retirement system.

Note: The law provides certain forfeiture provisions in the event you are convicted of a criminal offense involving your job.

3) What constitutes “creditable service” and can I receive credit for earlier teaching and public service?

“Creditable service” is time that you have worked as a teacher, administrator or other Massachusetts public employee, and for which you have paid or transferred retirement contributions to the MTRS. Creditable service also includes certain military service, as described further below. You may be able to purchase credit for prior substitute teaching, teaching in an out-of-state public school, certain nonpublic school teaching, other Massachusetts public service and active military service. Also, if you withdrew your retirement account from the MTRS or any other Massachusetts contributory retirement system, you may receive creditable service if you repay the amount withdrawn plus interest, prior to your date of retirement. The cost of purchasing past service is based on what you would have paid in contributions during that period (plus interest to date) or what you actually paid and withdrew (plus interest to date).

Creditable service includes the following types of service

• Regular Massachusetts public teaching service
• Out-of-state public school teaching service
• Overseas dependent school teaching service
(in a school supervised by the United States Department of Defense)
• Nonpublic school teaching service
• Massachusetts public school substitute, temporary or part-time teaching or tutoring service
• Other Massachusetts public service (with a Massachusetts town, city, state or regional authority)
• Peace Corps service
• Authorized leave of absence or a sabbatical from a Massachusetts public school
• Authorized leave of absence for active military service
• Active military service in the armed forces of the United States,
Massachusetts National Guard or active reserves

The cost of purchasing past service is based on what you would have paid in contributions during that period (plus interest to date) or what you actually paid and withdrew (plus interest to date).

Depending on how much creditable service you already have, it may or may not make financial sense for you to purchase outstanding service. If, based on your established creditable service and age, you are not at or near the maximum retirement allowance—80 percent of the average of your highest three consecutive years’ salaries—then, depending on how much outstanding service you have, purchasing it may result in a meaningful increase in your retirement allowance. While the present cost of purchasing the service may seem substantial, the difference in your retirement allowance may allow you to recoup the expense in a short period of time and pay off in the long run. If, however, you are already eligible to receive the maximum retirement allowance (80 percent of the average of your highest three consecutive years’ salaries) by reason of your established
creditable service and age, then purchasing outstanding service will be an expense that will not result in an increase in your retirement allowance.

To determine the effect of purchasing your outstanding service—and increasing your amount of creditable service—on your retirement allowance, go back to our Retirement benefit estimator. Do your calculations with your current years of service and then with your increased number of years. Evaluate the difference in light of the cost of purchasing your service.

You must purchase creditable service before the effective date of your retirement. If you wish to purchase out-of-state, overseas dependent school, nonpublic school teaching service or military service credit, you must do so while you are an active member of the MTRS or while you are on an authorized leave of absence. If you wish to purchase past Massachusetts public school substitute, temporary or part-time teaching service or other Massachusetts public service, you must do so prior to your date of retirement. Because an interest charge is added to the amount due, the cost of purchasing creditable service increases monthly.

In order to purchase creditable service, you must supply us with specific information about the type of service, where and when you rendered it, and what you received as compensation. We will then determine how much you would have paid in contributions for that service under our system, and calculate an invoice, and send it to you for payment. Depending on your particular situation, you may pay the total in full or, if eligible, in payments over time on our installment plan.

If you are a military veteran pursuant to M.G.L. c. 32, § 1, a veteran’s bonus will be added to your allowance. The veteran’s bonus is equal to $15 per year of creditable service, up to a maximum annual total of $300. Please note that this is the only amount that may be added to the calculated Option A allowance. This benefit is automatically granted based on documentation; you do not need to “purchase” it. However, you will need to submit a copy of your military discharge, also known as form DD214. If you are eligible to receive the maximum retirement allowance—80 percent of the average of your highest three consecutive years’ salaries—by reason of your established creditable service and age, you will still receive your veteran’s bonus on top of your maximum allowance.

Note: Generally, your military discharge form is form DD214. However, depending on when and with which branch of the military you rendered military service, your form may have another code.

Your retirement allowance is not subject to Massachusetts state income taxes. The federal government (IRS), however, will tax a large portion of your retirement
allowance immediately upon retirement.

Yes-if:

• you were married to a member of a Massachusetts contributory retirement system on November 1, 2003,
• your spouse will be retired from a Massachusetts contributory retirement system on your date of retirement, and
• you have at least ten years of creditable service but will be under age 55 on your date of retirement,

then you will be eligible to retire under a superannuation (regular or retirementplus) retirement allowance, irrespective of having attained age 55, using the age factor for 55.

10) Are there any restrictions on working after I retire?

For employment in the private sector, the federal government or public employment in another state, the answer is no. For Massachusetts public employment, the answer is yes. Please see our page on working after retirement.

Under the Massachusetts Retirement Law (M.G.L. c. 32), you may choose to retire under one of three benefit options: Option A, B or C. These options differ with regard to the amount paid and whether any benefits will be paid to someone else after your death. In brief:

Option	Benefit Amount	Survivor Benefit
A	Maximum allowance	None
B	Approximately 1% less than Option A amount	One-time, lump-sum payment of balance, if any, remaining in member’s annuity savings account. NOTE: There are no restrictions on who or how many individuals or entities may be named as beneficiary.
C	Approximately 9-11% less than Option A amount	Monthly benefits paid to a survivor. NOTE: Beneficiary must be the member’s parent, child, sibling, spouse or former spouse who has not remarried.

Please note that at the time of your retirement, your spouse must acknowledge his or her awareness and understanding of your option selection.

Option A

Of all three options, Option A provides you with the highest possible monthly allowance; it does not, however, provide for any continuing survivor benefits. Upon your death,

• all Option A payments will stop and
• your beneficiary will receive only the amount of the retirement allowance that you were entitled to in the month of your death. (Note: If a member dies within 30 days of the effective date of his or her retirement under Option A or B, and is survived by a spouse, that spouse can opt to receive a monthly survivor allowance equal to two-thirds of what the member would have received if he or she had retired under Option C.)

Your beneficiary will not receive any balance remaining in your annuity savings account.

Option B

Option B provides you with a monthly allowance that is approximately one percent less than an Option A allowance. This option’s payments are slightly less because Option B does provide for a possible one-time, lump-sum survivor benefit. The Option B survivor benefit is a lump-sum payment of the balance, if any, remaining in your annuity savings account at the time of your death. During your retirement, the balance in your annuity savings account decreases by an amount equal to the annuity portion of your retirement allowance. In most cases, the annuity account will be depleted after 11 years. For all intents and purposes, this record keeping is “invisible” and the reductions do not affect monthly retirement payments. Upon your death,

• all Option B payments will stop;
• your beneficiary will receive the amount of the retirement allowance that you
  were entitled to in the month of your death; and,
• the balance remaining in your account, if any, will be paid in a lump sum to your beneficiary or estate. (Note: If a member dies within 30 days of the effective date of his or her retirement under Option A or B, and is survived by a spouse, that spouse can opt to receive a monthly survivor allowance equal to two-thirds of what the member would have received if he or she had retired under Option C.)

If your annuity savings account is depleted while you are receiving an allowance, you will continue to receive the full Option B retirement allowance for life; upon your death, your beneficiary will receive only the amount of the retirement allowance that you were entitled to in the month of your death. Under Option B, you may designate more than one person as your beneficiary and that person or persons need not be related to you.

Option C

Option C provides you with the smallest monthly allowance (approximately 9 percent to 11 percent less than an Option A allowance). It also provides your surviving beneficiary with monthly payments for the rest of his or her life. The calculation of the Option C allowance is based on the life expectancies of both you and your beneficiary at the time of your retirement. Upon your death,

• all Option C payments will stop;
• your beneficiary will receive the amount of the retirement allowance that you
  were entitled to in the month of your death; and,
• your beneficiary will receive a survivor benefit equal to two-thirds of the amount of your Option C allowance. Your beneficiary must be your spouse, parent, sibling, child or former spouse who has not remarried.

A special note about Option C: If you retire under Option C on or after January 12, 1988 and your beneficiary predeceases you, you cannot name a different “Option C beneficiary.” Under the terms of the so-called “pop up” provision of the Pension Reform Act of 1987, your monthly benefit will “pop up” to the Option A benefit amount that you would have received on the date of your retirement, plus any cost-of-living adjustments. This new, higher amount is then paid to you as of the date of the death of your beneficiary and until you die. In the event that your Option C beneficiary predeceases you, you will need to notify the MTRS; we will require that you complete an Option C Reversion Claim Form, and then we will recalculate your retirement allowance.

A note about eligibility verification

Massachusetts law requires all public retirees to file an affidavit verifying their eligibility to receive a retirement allowance. Periodically after you have retired, the MTRS will contact you to confirm your eligibility.

Estimating your allowances under Options A, B and C: Factors, tables and worksheet

The formulas for calculating your benefits according to Options A, B and C are shown below; to obtain the correct factors, use the Option A age factors and Option C factors included here. The examples illustrate the calculations for a member who is a veteran, and who retires under RetirementPlus at age 58 with 35 years of creditable service, an average salary of $42,000 for the last three consecutive years, and a beneficiary who is age 57.

Note: This is not an interactive worksheet that you can fill in on screen. Accordingly, you may want to print this page and complete the worksheet on paper. Or, use our online estimator.

Estimated Option A allowance			Example		You
	Option A Age Factor (see Option A age factor table)		.018		___________
x	Years of creditable service	x	35	x	___________
	% of salary average		63%		__________%
+	RetirementPlus percentage, if applicable Note: If you are participating in RetirementPlus, and you have 30 or more years of creditable service--at least 20 of which are teaching service with the MTRS or the Boston Retirement System--add 2% for each full year of creditable service over 24 years (see RetirementPlus percentage table)	+	22%	+	__________%
	Allowable % of salary average Note: Your "% of salary average" cannot exceed 80%.		80%		__________%
x	3-year salary average	x	$42,000	x	$___________
	Option A annual allowance		$33,600		$___________
+	Veteran’s bonus, if any Note: If you are a wartime veteran, $15 for each year of teaching service (up to a maximum of $300) is added to the Option A annual allowance.	+	$300	+	$___________
	Final Option A annual allowance		$33,900		$___________

---

Estimated Option B allowance			Example		You
	Final Option A annual allowance (see above)		$33,900		$___________
x	99% (approximately 1% less than Option A)	x	99%	x	99%
	Option B annual allowance		$33,264		$___________

---

Estimated Option C allowance and survivor benefit			Example		You
	Option A annual allowance (see above)		$33,600		$___________
x	Option C Factor (see Option C factor table)	x	92%	x	__________%
	Option C annual allowance		$30,912		$___________
+	Veteran’s bonus, if any Note: If you are a wartime veteran, $15 for each year of teaching service (up to a maximum of $300) is added to the Option A annual allowance.	+	$300	+	$___________
	Final Option C annual allowance		$31,212		$___________
x	2/3 (allowed survivor portion)	x	2/3	x	2/3
=	Final annual member-survivor benefit	=	$20,808	=	$___________

 

Option A age factors

Use your age on the date of your retirement

Age	Factor	Age	Factor	Age	Factor	Age	Factor	Age	Factor
41 42 43 44 45	.001 .002 .003 .004 .005	46 47 48 49 50	.006 .007 .008 .009 .010	51 52 53 54 55	.011 .012 .013 .014 .015	56 57 58 59 60	.016 .017 .018 .019 .020	61 62 63 64 65+	.021 .022 .023 .024 .025

RetirementPlus percentage table

If you are participating in RetirementPlus, add the percentage that corresponds to the number of full years of creditable service (e.g., if you have 32.8 years of service, your RetirementPlus percentage is 16.00%).

Service (full years)	RetirementPlus percentage	Service (full years)	RetirementPlus percentage	Service (full years)	RetirementPlus percentage
30 31 32 33	12% 14% 16% 18%	34 35 36 37	20% 22% 24% 26%	38 39 40	28% 30% 32%

Option C factors

To obtain the Option C Factor, determine what your age will be on the birthday closest to your retirement date; then determine what the beneficiary's age will be on his or her birthday that is closest to your retirement date. Find these ages on the appropriate axes and follow the row and column into the table. The Option C factor is the number where the row and column intersect.

Option C factor table for members retiring on or after July 1, 2004

Member’s closest age		67	78	78	78	79	79	79	80	80	81	81	81	82	82	83	83	84	84	85	85	86	86	87	87	88
		66	79	79	80	80	80	81	81	82	82	82	83	83	84	84	84	85	85	86	86	87	87	88	88	89
		65	80	81	81	81	82	82	82	83	83	84	84	84	85	85	86	86	87	87	87	88	88	89	89	90
		64	82	82	82	83	83	83	84	84	84	85	85	86	86	86	87	87	88	88	88	89	89	90	90	91
		63	83	83	84	84	84	84	85	85	86	86	86	87	87	87	88	88	89	89	89	90	90	91	91	91
		62	84	84	85	85	85	86	86	86	87	87	87	88	88	88	89	89	90	90	90	91	91	91	92	92
		61	85	85	86	86	86	87	87	87	88	88	88	89	89	89	90	90	90	91	91	92	92	92	93	93
		60	86	87	87	87	87	88	88	88	89	89	89	90	90	90	91	91	91	92	92	92	93	93	93	94
		59	87	88	88	88	88	89	89	89	90	90	90	91	91	91	91	92	92	92	93	93	93	94	94	94
		58	88	88	89	89	89	90	90	90	90	91	91	91	92	92	92	93	93	93	93	94	94	94	95	95
		57	89	89	90	90	90	90	91	91	91	92	92	92	92	93	93	93	94	94	94	94	95	95	95	95
		56	90	90	90	91	91	91	91	92	92	92	93	93	93	93	94	94	94	94	95	95	95	95	96	96
		55	91	91	91	91	92	92	92	92	93	93	93	93	94	94	94	94	95	95	95	95	96	96	96	96
			44	45	46	47	48	49	50	51	52	53	54	55	56	57	58	59	60	61	62	63	64	65	66	67
			Beneficiary’s closest age

Please note that, for the purposes of this web site, the values in the Option C table are rounded, approximate percentages. Also, if the age combination for you and your beneficiary is not listed, please see the complete listing (pdf; 8 pages).

The regular retirement application process

We look forward to assisting you throughout the process and making your transition to retirement as smooth and simple as possible. So that you know what to expect, below is an overview of the steps you--and we--need to take. NOTE: If you are retiring under RetirementPlus, please be sure to review that area of our web site for additional information regarding the retirement process.