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School employees who have at least 60 months of prior experience in a Texas school district paying into Social Security, and who are eligible for retirement through the Teacher Retirement System, should be aware of a provision that might allow them to utilize the virtually defunct one-day exemption in order to retain eligibility for full spousal Social Security benefits. However, any such decision would have to be made by the end of February of this year.
In 2004, the U.S. Congress passed a law to eliminate the one-day exemption, under which many Texas school employees worked one day in one of the handful of districts participating in Social Security in order to avoid the Government Pension Offset. The bill required that an employee work his/her last 60 months in a district participating in Social Security in order to avoid the GPO, however, the legislation also included a provision designed to help those employees who had previously worked in a SS-participating district.
That law provided the following:
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An employee whose last day of employment prior to retirement is on or before March 2, 2009, is allowed to count prior experience toward the 60-month requirement.
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That prior experience must be time worked in a Texas school district or other entity participating in Social Security and TRS prior to the March 2, 2004, enactment of the bill.
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The 60-month requirement could not be reduced to less than one month (essentially meaning that an employee who already had 60 or more months of employment in a SS-participating district would still have to work his/her last month in a SS-participating district).
A provision in Social Security Administration regulations provides that a single day in a month will count as a full month for purposes of SSA calculations. That day must come during a month in which the employee is not working in a non-participating school district.
It all comes together like this: If Mary Smith worked for 10 years in the 1990s in Austin ISD, paying into Social Security, then moved to the Round Rock school district (not paying into Social Security), she can use that AISD time to count toward the 60-month requirement. In order to avoid the GPO reduction in her spousal Social Security benefits, she would have to work her last RRISD day no later than Feb. 28, 2009, then work in a district paying into Social Security on March 1, 2009. That day must be her last day of government employment before she retires.
IMPORTANT NOTES: First, it is absolutely crucial that employees get current, accurate and detailed information directly from the Social Security Administration and from the TRS before making any decisions regarding retirement.
It is also important for any employee to weigh decisions involving retiring earlier than planned to determine whether the Social Security income gained would be enough to offset the amount of TRS annuity monies lost (as well as other considerations, such as whether the employee would be eligible for TRS-Care retiree health insurance).
Finally, employees may need to obtain permission from the school district to resign mid-contract, or they could face potential certification sanctions.
All of the information we have on this topic, as we understand it, is included in this article, and TCTA is unable to provide financial advice, thus we strongly recommend employees considering their eligibility for this option to contact their local Social Security Administration office as soon as possible.
Updated: 02/12/09
