Te a c h e r s R e t i r e m e n t A s s o c i a t i o n
60 Empire Drive  Suite 400  St Paul MN 55103-4000
651.296.2409  800.657.3669  651.297.5999 FAX  800.627.3529 TTY
Service Credit Q&A
Starting with fiscal year 2013 (July 1, 2012), service credit is based on annual base salary and is not
based on hours per day and number of days worked per year.
What is “service credit” used for?
Service credit impacts your eligibility for benefits and the amount of your benefits. Most teachers can
retire when they have three years of service credit and reach age 55. Your retirement benefit is based
on a formula that uses your service credit, high-5 average salary, and age.
What is “annual base salary”?
"Annual base salary" is provided by the employer unit. It is divided by 12 to provide the “monthly base
salary” used to calculate service credit. The annual base salary is unique to an employer unit. It also
varies by employer type:
Independent school district (K-12) or Educational Cooperative: the lowest full-time Bachelor of
Arts (BA) base contract salary for the previous fiscal year for that employing unit.
Charter school: the lowest starting annual salary for a full-time licensed teacher employed
during the previous fiscal year for that employing unit.
State agency or professional organization: the lowest starting annual salary for a full-time
Teachers Retirement Association covered position for the previous fiscal year for that employing
unit.
How is service credit calculated?
Service credit is calculated by dividing the teacher’s monthly salary by the employer unit’s monthly base
salary. This number is multiplied by .111 to determine the teacher’s monthly service credit; however,
service credit is capped at .111 per month. For example,
Employer’s monthly base salary = $2,500
Member’s monthly salary = $4,500
Calculation: $4,500 ÷ $2.500 = 1.8
1.8 × 11.1% = .1998 (capped at .111 for any month’s service credit)
Can I receive more than 1 year of service credit in a year?
No. A TRA member may not receive more than 11.1% of a year’s service credit in a calendar month.
You can receive a maximum of 1 year of service credit in one fiscal year.
If the “annual base salary” is $30,000, and I am a highly paid administrator, is it possible for me to
earn one year of service credit by only working three months?
No. If you only work three months, you will receive only three months of service credit.
The monthly base salary will be calculated by dividing the annual base salary. Service credit will be
calculated and accumulated on a monthly basis for all twelve months of the fiscal year by dividing the
earned salary for the month by the monthly base salary and multiplying by 0.111. Annual service credit
will be calculated by adding the monthly service credit for all twelve months of the fiscal year and
rounding the result to two decimal places. The maximum service credit that can be earned in a month is
0.111.
Annual service credit will be calculated by adding monthly service credit amounts during the fiscal year;
subject to a one-year maximum service credit cap in a fiscal year.
Example: If the member works the entire fiscal year:
BA+0 (lowest BA level) = $30,000 ÷ 12 = $2,500
Earned Salary: $90,000 yearly salary ÷ 12 = $7,500.00
$7,500.00 ÷ $2,500 x 0.111 = 0.333 (0.111 max per month)
0.111 per month x 12 = 1.33 = 1 year service credit max
If the member terminates mid-year, service credit will be calculated using 0.111 per month worked if
the termination date is on or after the 16th of the month. If the termination date is prior to the 16th of
the month, the maximum service credit earned is limited to one-half of a month or 0.056.
Example: If the member works July 1 through February 11:
BA+0 (lowest BA level) = $30,000 ÷ 12 = $2,500
Earned Salary: $90,000 yearly salary ÷ 12 = $7,500.00
$7,500.00 ÷ $2,500 x 0.111 = 0.333 (0.111 max per month)
0.111 per month x 7 = 0.777 + 0.056 = 0.83 service credit
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Examples of Service Credit Calculation
Example 1. A full-time contract with regular pay option
In fiscal year 2013, the member works in a full-time contract position that pays $45,000 annually. The
member is paid $2,250 on the 15th and on the last day of every month. The annual base salary for the
employer unit is $30,000.
Formula for Monthly Base Salary: Annual Base Salary ÷ 12 months = Monthly Base Salary
$30,000 ÷ 12 months = $2,500
Service Credit Calculations:
August: $2,250 / $2,500 x .111 = .100
September through May: $4,500 / $2,500 x .111 = .133*
June: $2,250 / $2,500 x .111 = .100
(*Service credit is capped at .111 in any month)
TRA calculates the monthly service credit as follows:
Month
Employer’s Monthly
Base Salary
Member’s 2013
Monthly Salary
Monthly
Service Credit
July
$2,500.00
August
2,500.00
$2,250.00
0.100
September
2,500.00
4,500.00
0.111
October
2,500.00
4,500.00
0.111
November
2,500.00
4,500.00
0.111
December
2,500.00
4,500.00
0.111
January
2,500.00
4,500.00
0.111
February
2,500.00
4,500.00
0.111
March
2,500.00
4,500.00
0.111
April
2,500.00
4,500.00
0.111
May
2,500.00
4,500.00
0.111
June
2,500.00
2,250.00
0.100
Total
$30,000.00
$45,000.00
1.00**
** The monthly service credit totals 1.199; the member’s service credit is capped at .111 for any month
and 1.00 for the year.
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Example 2. Part-Time Only
In fiscal year 2013, the member works part-time during the school year and is paid various months for
salary earned. The annual base salary for the employer unit is $30,000.
2012 Monthly Base Salary = $2,500
TRA calculates the monthly service credit as follows:
Month
July
August
September
October
November
December
January
February
March
April
May
June
Total
Employer’s Monthly
Base Salary
$2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
$30,000.00
Member’s 2013
Monthly Salary
Monthly
Service Credit
2,000.00
0.089
1,000.00
500.00
0.044
0.022
3,000.00
200.00
0.111
0.009
$6,700.00
0.28
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Example 3. Part-time contract with retro-pay, extracurricular and summer payoff
2012 Annual Base Salary: $30,000
2012 Monthly Base Salary: $2,500
Part-Time Contract Position: $24,000 (paid $1,000 on 15th and on the last day of each month)
Retroactive Payment: $210
Coaching: $3,200
Summer Payoff: $4,120
Late contract settlement increased annual salary to $24,720 ($1,030 per pay period beginning in
December)
Total annual service credit (1.10) is capped at 1.00.
Month
Salary
Retroactive
Summer
Total
Monthly
Payoff
Salary
Service Credit
Coaching
July
August
September
$1,000.00
$31.40
$216.84
$1,248.24
0.055
2,000.00
58.88
$406.58
2,465.46
0.109
October
2,000.00
60.84
November
2,000.00
58.88
290.91
$420.13
2,480.97
0.110
$406.58
2,756.37
0.111
December
2,060.00
901.82
$420.13
3,381.95
0.111
January
2,060.00
901.82
$420.13
3,381.95
0.111
February
2,060.00
814.55
$379.47
3,254.02
0.111
March
2,060.00
290.90
$420.13
2,771.03
0.111
April
2,060.00
$406.58
2,466.58
0.110
May
2,060.00
$420.13
2,480.13
0.110
$203.30
1,233.30
0.055
$4,120.00
$27,920.00
June
Total
1,030.00
$20,390.00
$210.00
Allocation of Retroactive:
$210.00
(Pay period 8/16/12 to 11/30/12)
$3,200.00
1.00
$4,120.00
Summer Payoff:
(Pay period 8/16/12 to 6/15/13)
August
16
$31.40
August
16
September
30
58.88
September
30
406.58
October
31
60.84
October
31
420.13
30
58.88
November
30
406.58
107
$210.00
December
31
420.13
January
31
420.13
February
28
379.47
March
31
420.13
April
30
406.58
31
420.13
November
Total Days
Allocation of Coaching:
$3,200.00
(Pay period 11/21/12 to 3/10/12)
November
10
$290.91
May
December
31
901.82
June
January
31
901.82
February
28
814.55
March
10
290.90
110
$3,200.00
Total Days
Total Days
$216.84
15
203.30
304
$4,120.00
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