| (a) The contributions required from a member to the
Teacher Retirement System of Texas are generally based upon the member's
annual compensation. Benefits paid by the retirement system are also
generally based in whole or in part upon the annual compensation credited
to a member for certain school years. A member's annual compensation
for any particular school year has the meaning given by the law and
rules applicable for that year. Beginning with the 1981-1982 school
year, and for school years thereafter, annual compensation consists
of the salary and wages that are paid or payable to a member for employment
which is eligible for membership in the retirement system during that
school year.
(b) Some payments made by an employer to a member are
not salary or wages, even though the payments may be otherwise considered
as compensation under the employment contract or federal tax laws.
In general salary and wages creditable and subject to deposit are
those types of monetary compensation that are recurring base pay for
periods of employment and that:
(1) are earned or accrue proportionally as the work
is performed, so that a member terminating employment between pay
periods is entitled to a proportional amount of the compensation based
on either length of employment or amount of work performed;
(2) are paid or payable at fixed intervals, generally
at the end of each pay period; and
(3) are not specifically excluded under subsection
(d) of this section.
(c) The following types of monetary compensation are
to be included in annual compensation:
(1) amounts deducted from regular pay for the state-deferred
compensation program, for a tax-sheltered annuity, or for a deferred
compensation arrangement qualifying under the United States Internal
Revenue Code, §401(k);
(2) normal payroll deductions which are not tax-exempt
or tax-deferred;
(3) additional compensation paid for additional duties,
for longevity, for overtime worked as required by law, or for service
in a particular location or specialty the employer determines requires
additional compensation compared to other employees of that employer,
provided that these payments clearly meet the requirements of subsection
(b) of this section;
(4) delayed payments of lump-sum amounts which by law
or contract should have been paid at fixed intervals and which otherwise
meet the requirements of subsection (b) of this section provided the
amounts are credited to the payroll period in which they were earned;
(5) amounts withheld from regular pay under a cafeteria
plan as provided by §25.22 of this title (relating to Contributions
to Cafeteria Plans and Deferred Compensation);
(6) performance pay provided it meets the requirements
of §822.201(b)(4), Government Code and §25.24 of this title
(relating to Performance Pay);
(7) compensation received under the relevant parts
of the educator excellence awards program under Subchapter O, Chapter
21, Education Code, or a mentoring program under §21.458, Education
Code, that authorize compensation for service, and compensation earned
under the awards for student achievement program under Subchapter
N of Chapter 21, Education Code, prior to the repeal of statutory
provisions authorizing that program;
(8) a merit salary increase made under §51.962,
Education Code;
(9) amounts deducted from regular pay for a qualified
transportation benefit under §659.202, Government Code;
(10) compensation designated as health care supplementation
by an employee under Subchapter D, Chapter 22, Education Code;
(11) workers' compensation paid as temporary wage replacement
pay and reported or verified to TRS and with member contributions
paid on the amount of workers' compensation, by the end of the school
year following the year in which it was paid. Workers' compensation
paid as temporary wage replacement pay and not reported or verified
to TRS with member contributions paid on the workers' compensation
in the time period provided may be verified and purchased as provided
in §25.45 of this title (relating to Verification of Unreported
Compensation or Service) and §25.43 of this title (relating to
Cost for Unreported Service or Compensation) no later than the end
of the fifth year following the school year in which it may be reported
or verified under this paragraph; and
(12) increased compensation paid by a school district
using funds received by the district under the teacher incentive allotment
under §48.112, Education Code.
(d) The following are excluded from annual compensation:
(1) allowances, including housing, car, cell phone,
and expense allowances;
(2) reimbursements for expenses;
(3) payments for accrued compensatory time for overtime
worked or for accrued sick leave or vacation, except that continued
payments of normal compensation when vacation, sick, administrative,
or emergency leave or compensatory time is actually taken by an employee
will be included in annual compensation to the extent otherwise permitted
by this section;
(4) benefits, except as provided in subsection (c)(1)
of this section, which either are not subject to federal income tax
or which will be subject to federal income tax in a future year;
(5) bonus and incentive payments, including signing
or retention bonuses that are offered to entice a person to enter
into an employment arrangement or to stay for a period of time in
an employment arrangement, whether paid under Subchapter O, Chapter
21, the Education Code, or other authority, unless state law expressly
provides that a type of bonus or incentive payment is to be considered
TRS-creditable compensation;
(6) employer payments for fringe benefits, including
direct cash payments in lieu of fringe benefits, except as provided
in §25.22 of this title (relating to Contributions to Cafeteria
Plans and Deferred Compensation);
(7) payments, except as provided in subsection (c)(1),
(2), (5), and (9) of this section, made to third parties for the benefit
of a member;
(8) payments for work as an independent contractor
or consultant;
(9) all nonmonetary compensation;
(10) active employee health coverage or compensation
supplementation or any other amount received by an employee under
former Article 3.50-8, Insurance Code; former Chapter 1580, Insurance
Code; Subchapter D, Chapter 22, Education Code, as that subchapter
existed on January 1, 2006; or Rider 9, page III-39, Chapter 1330,
Acts of the 78th Legislature, Regular Session, 2003 (the General Appropriations
Act), regardless of whether the employee receives the amount in cash,
uses it for payment of health care coverage, or uses it for any other
option available by law;
(11) any other fringe benefit;
(12) payments that an employer intentionally does not
include in salary and wages because they are not expected to be permanently
recurring in each pay period of employment or because they are not
considered base pay and that, for the protection of the actuarial
soundness of the retirement system, the type of payment should not
be included in the calculation of a lifetime retirement benefit intended
to replace a percentage of the member's base pay at retirement;
(13) payments for terminating employment or paid as
an incentive to terminate employment. Examples of such payments include
payments for contract buy-outs, amounts paid pursuant to an agreement
in which the employee agrees to terminate employment or to waive or
release rights to future employment, and amounts paid pursuant to
early retirement incentive programs or other programs intended to
increase the compensation paid to the employee upon receipt of the
resignation of the employee or the waiver or release of rights to
future employment. Increased compensation paid in the final year of
employment prior to retirement that exceeds increases approved by
the employer for all employees or classes of employees is presumed
to be payment for terminating employment;
(14) payments received under relevant parts of the
educator excellence awards program under Subchapter O, Chapter 21,
Education Code that do not represent payments for service rendered
by the member;
(15) except as provided in §25.28(e) of this title
(relating to Payroll Report Dates), amounts paid pursuant to a settlement
agreement except that compensation paid to an employee while on paid
leave of any type, including paid administrative or emergency leave
under the terms of a settlement agreement is creditable under paragraph
(3) of this subsection; and
Cont'd... |
