LEAVES & OUT-OF-STATE PURCHASE

What you should know

By taking a leave, you might forfeit service credit because you did not earn a salary or pay into TRA. Purchasing service credit for the time you were on leave can increase your eventual retirement benefit.

Employer reporting

All leaves must be reported to TRA by your employer when approved, whether paid or unpaid. This enables TRA to accurately calculate your service credit (or, for Minnesota State University employees, full-time equivalent) and ultimately your annuity benefit. Your employer must report the leave type and effective date to TRA within 14 days after the last day of the payroll cycle in which the leave was approved.

You will receive a confirmation letter from TRA when your employer has reported your leave of absence. If your employer does not report the leave, you will be unable to purchase service credit for your leave. If you did not receive a confirmation letter, contact your employer to verify your leave was reported to TRA. You can log in to your MyTRA account and review your leave history at any time.

You cannot request a refund of TRA contributions while on a leave of absence.

The leave of absence confirmation letter explains:

Whether you are eligible to purchase service credit for your leave.
How your purchasable service credit will be calculated.
When you can expect correspondence from TRA with the cost and payment deadline to purchase your leave.

TRA will provide you with the cost to purchase service credit after all the earned salary for the fiscal year of your leave of absence is reported by your employer and processed by TRA.

You, Your Employer, and TRA

The employer may grant a leave even if it does not fall under one of the TRA categories that allow the purchase of service credit.

If the leave is for only part of the school year, service credit is calculated based on the part of the year you actually perform teaching service, including paid sick leave and vacation days.

To be eligible to purchase service credit for the period of the leave of absence, you must retain the right to full reinstatement both during and at the end of the leave. Superintendents on an extended leave of absence are exempt from the reinstatement requirement.

The termination date for all leaves is the end date covered by the leave or the effective date of your resignation, whichever is earlier.

Since a leave of absence maintains a continuing employer/employee relationship with no termination of teaching service, you are not eligible to receive a refund of member contributions when on any authorized leave of absence. If placed on an unrequested leave of absence (layoff), you are entitled to a refund of member contributions plus interest.

How to Pay

You may only make the purchase with personal funds or through a direct rollover of funds from a traditional IRA or other eligible plan. An eligible plan must be a qualified tax-deferred employer plan under the Internal Revenue Code such as a 401(k), 403(b), governmental 457(b), profit-sharing, defined-benefit, stock bonus, or money purchase plan. Roth IRA rollovers are not permitted.

Leave Types

Medical leave may be granted in the case of illness or injury.

Requirements
School districts may grant members a medical leave of up to five years. Members should contact TRA for information regarding disability eligibility, but may not receive a disability benefit and purchase service credit for the same period of time.

Payment Information
Payment must include both the member and employer contributions based on average full-time monthly salary on the date the leave commenced and is calculated using the rates in effect during the time of the leave.

Each year of the medical leave must be purchased in order to purchase subsequent years. Payment without interest must be received no later than Dec. 31 of the fiscal year following the leave or before the member’s date of retirement, whichever is earlier. Payments received after Dec. 31, and before July 1 of the following year, must include compound interest at the monthly rate of 0.583 percent. Payments received on or after July 1 of the following year will be based on the full actuarial cost.

Reference: MN Statutes 354.095

Family leave may be granted under United States Code, title 42, Section 12631, and may be used in conjunction with medical or parental leave.

Requirements
Purchase is allowed for up to 12 weeks of service credit to cover the period of the leave. Members are required to return to public service after the leave period for which allowable service credit is purchased to be eligible to purchase service credit for a subsequent authorized family leave.

Payment without interest must be received no later than Dec. 31 of the fiscal year following the leave or before the member’s date of retirement, whichever is earlier. Payments received after Dec. 31, and before July 1 of the following year, must include compound interest at the monthly rate of 0.583 percent. Payments received on or after July 1 of the following year will be based on the full actuarial cost.

Reference: MN Statutes 354.096

Unpaid parental leave may be granted for the birth or adoption of a child.

Requirements
Purchase is allowed for up to one year of allowable service credit.

Reference: MN Statutes 354.093

A member who makes payment for an extended leave and receives allowable and formula service credit may not pay employee contributions or receive allowable or formula service credit for the same fiscal year in any other Minnesota public employee pension plan. The extended leave does not prohibit a member from being employed as a substitute teacher by any school district during that year. However, a member may not pay retirement contributions or receive allowable or formula service credit in the association for teaching service rendered for any part of any year for which the member pays retirement contributions or receives allowable or formula service credit while on an extended leave.

Requirements
A member may not receive allowable or formula service credit for the same fiscal year in any other Minnesota public employee pension plan.

The right to full reinstatement both during and after the leave is required, unless the member is a superintendent.

Members must have at least five years of employment in the district that is granting the leave.

If the employer agrees to pay member contributions, a copy of the agreement executed between the employer and the member must be submitted to TRA.
The member must have 10 years of allowable service in any of the state teacher retirement funds (TRA or the St. Paul Teachers Retirement Fund Association), unless one of the following exceptions apply:

K-12 exception: The member has 10 full-time years of allowable or forfeited teaching service credit. Members can be full-time or part-time employees.

State University and College Exception: The member must have 10 years of allowable service — forfeited service will not be accepted. Members must be full-time employees.

The leave must be granted for at least three years, but not more than five years.

Leave granted due to a school consolidation (exceptions to extended leave requirements (MN Statutes 123A.48 subd 23) :

The right to full reinstatement is not a requirement.
The member must have 10 years of allowable service with TRA.
Members do not need five years of employment in the district that is granting the leave.
The leave may be granted for a maximum of five years (no minimum requirement).

Leave granted to teach at a charter school (exceptions to extended leave requirements (MN Statutes 124E.12 subd 6):

The leave can be granted for a maximum of five years (no minimum requirement).

Payment Information
Payment must include both the member and employer contributions based on the salary received during the year immediately preceding the leave and the appropriate contribution rates in effect for each year of the extended leave.

The employer may pay any portion of the employer share of the contributions, but is not obligated to do so. The employer may also agree to pay any portion of the member contributions.
Each year of an extended leave must be purchased in order to purchase subsequent years.

Payment without interest must be received no later than June 30 of each fiscal year of the extended leave or before the member’s date of retirement, whichever is earlier. Payments received after June 30, and before July 1 of the following year, must include compound interest at the monthly rate of 0.583 percent. Payments received on or after July 1 of the following year will be based on the full actuarial cost.

MN Laws (2003), 1st Special Session, Chapter 12

An employer may agree to pay for all or a portion of the employee retirement contributions for members on an extended leave of absence. This provision reads as follows: “The employer may enter into an agreement with the exclusive bargaining representative of the teachers in the district under which, for an individual teacher, all or a portion of the employee’s contribution is paid by the employer. Any such agreement must include a sunset of eligibility to qualify for the payment and must not be a part of the collective bargaining agreement.”

The law also requires that, “Any school district paying the employee’s retirement contributions under this section shall forward to the applicable retirement association or retirement fund a copy of the agreement executed by the school district and the employee.”

2007 legislation allows payment in the year following the extended leave of absence of the employer and employee contributions including compounded interest at a monthly rate of 0.62 percent. If payment is made after this date, it will be based on the full actuarial cost.

Reference: MN Statutes 354.094, 122A.46, 123A.48 subd 23, 124E.12, and 136F.43

Military leave may be granted for purposes of entering the military service.

Requirements
The member must have been discharged under honorable conditions and must upon release from active duty return to teaching service within a reasonable length of time.

Payment Information
Payment is based on the salary that the member would have received if they had continued to provide teaching service.

If the member pays the member contributions, the employer must pay the employer contributions, plus interest on member and employer contributions at the annual rate of 7 percent from the end of each fiscal year of the leave to the end of the month in which payment is received.

Payment must be made during the period that begins with the date that the teacher returns to teaching and that has a duration of three times the length of the military service period, but not to exceed five years. If this payment period is less than three years, payment may then be made within three years from the discharge date.

Reference: MN Statutes 354.53

Prior Military Service
Service credit may be purchased for active, vested TRA members who have been honorably discharged from prior military service before becoming a teacher or have failed to obtain service credit for a military leave of absence during their teaching career. These members are eligible to purchase service credit for the initial period of enlistment, induction or call to active duty.

Payment Information
Prior service credit purchase amount is based on the full actuarial cost. Payment for prior military service must be made before the member’s termination of teaching service.

Reference: MN Statutes 354.543

Leave may be granted by an employer for reasons other than sabbatical, medical, parental, family, extended, legislative, union or military purposes. Examples include administrative, personal, child care, or unpaid.

Requirements
Although an authorized “other” leave of absence protects the employer/employee relationship and employment reinstatement privileges, state statute does not provide for the purchase of retirement service credit for the period of an “other” leave.

Paid and unpaid “other” leaves must be reported to TRA. TRA requires a reason for the leave so we can verify whether or not the leave fits into any other leave category.

Payment Information
Purchase not permitted.

Sabbatical leave may be granted for purposes of professional improvement or service.

Requirements
The sabbatical leave must be compensated by salary that is not less than one-third of the salary paid in the year preceding the leave. A maximum of three years of full service credit is available for authorized sabbatical leaves taken in any 10 consecutive years.

Payment Information
Contributions are required on the full contract salary and will be withheld from the member’s gross pay. These contributions are paid through payroll deduction and are not subject to state or federal taxes until retirement. The employer pays all employer contributions based on full contract salary.

If a reduced sabbatical salary is paid for two years, contributions must be paid based on full contract salary during both years.

Reference: MN Statutes 354.092, 122A.49

Leave must be granted to elected state legislators.

Requirements
A member who also serves in the Minnesota Legislature may choose to participate in TRA’s part-time teacher program. Legislators participating in the program may purchase any shortfall in their salary and service credit.The employer must submit a part-time teacher program form TRA-7500 to the TRA office by March 1.

Payment Information
Member contributions are based on full-time equivalent salary and are paid by payroll deduction. The member and employer decide who is responsible to pay the employer contributions on the unearned portion of salary, and which proportion each will pay.

Reference: MN Statutes 354.66, 3.088

Leave may be granted to an employee or officer of a labor organization.

Requirements
Election of TRA coverage during a union leave must occur within 90 days of the beginning of employment as an employee or officer of a labor organization (that is the exclusive bargaining agent) or the state affiliate of the labor organization representing teachers covered by TRA; or an association of school administrators.Coverage may not be elected for this period of service if earning teaching service, at the same time, with the St. Paul Teachers Retirement Fund.

Payment Information
The covered salary for a labor organization employee is limited to the lesser of the employee’s actual salary or 75 percent of the governor’s salary.

For salary earned as an employee or official of a labor organization, payment of both member and employer contributions are the member’s responsibility. The employer may choose to pay the employer contributions, at its discretion.

Reference: MN Statutes 354.41

The State of Minnesota may grant up to 1,040 hours of voluntary unpaid leave to eligible state employees in each two-year period beginning July 1 of each odd-numbered year.

Requirements
To be eligible to receive service credit and salary for pension purposes, payment must be made to TRA equal to the member and employer contribution rates for the salary that would have been earned had the member not been on a voluntary unpaid leave of absence.

Payment Information
The member may purchase service credit and salary for the number of hours on voluntary unpaid leave by paying a lump sum.

If the member pays the member contributions for the period of the leave, the employer must pay the employer contributions. The employer may, at its discretion, pay both the member and employer contributions for the period of leave.

Reference: Chapter 43A.49 and Session Laws

Minnesota law allows for members to purchase salary and service lost due to a strike. See statute 354.72

Purchasing Out-of-State Service Credit

Active members are allowed to purchase up to five years of service credit for service performed as a Pre-K-12 teacher/administrator in a public or charter school in another state. The purchased service credit will be included in your TRA benefit calculation when you retire.
To purchase, the following criteria must be met:

You must have at least three years of TRA allowable service credit.
You must provide TRA with validation that the service occurred.
You must have forfeited all rights to benefits for that same period of out-of-state employment.
You must pay the full actuarial cost.
You must repay, in full, all refunds available to be reinstated with any Minnesota defined benefit public pension plan.

Timeline and Expectations Handout

Purchasing Service Credit for Prior Military Service

Active, vested TRA members who have been honorably discharged from prior military service before becoming a teacher or have failed to obtain service credit for a military leave of absence during their teaching career are eligible to purchase service credit for the initial period of enlistment, induction or call to active duty.

Your purchase is based on actuarial cost and is not related to when the service was performed or your salary at the time.

Payment for prior military service must be made before your effective date of retirement. TRA statutory authorization to accept prior military service credit payment is outlined in Minnesota Statutes 354.543.

NOTE: Purchasing out-of-state or prior military service credit does not change the date you first became a TRA member for the purpose of computing a Rule-of-90 benefit.