Updated October 30, 2026. Quick answer: Montana’s Teachers’ Retirement System pays a Guaranteed Annual Benefit Adjustment (GABA) on January 1 of each year. It is set in law, not by an index: Tier 1 recipients (membership beginning before July 1, 2013) get 1.5%, and Tier 2 recipients (membership beginning on or after that date) get 0.5% while the most recent valuation shows the system under 90% funded. A recipient needs at least 36 monthly payments made before January 1. The January 2027 GABA is fixed by statute for Tier 1.
What TRS says
The TRS GABA page says: “GABA increases are set in TRS law and are not keyed to external economic variables.” On Tier 2: “The current GABA for Tier 2 members is 0.5% and may not increase if the funded ratio of the system remains below 90%, based on the results of the most recent actuarial valuation of TRS.”
The statute
Section 19-20-719 of the Montana Code says for Tier 1: “On January 1 of each year, the retirement allowance payable to each tier one member or benefit recipient of a tier one member who is eligible under subsection (3) must be increased by 1.5%.” For Tier 2: “if the most recent actuarial valuation of the retirement system shows that retirement system liabilities are less than 90% funded, 0.5%”. At higher funding: “at least 90% funded and the provision of the increase is not projected to cause the system’s liabilities to be less than 85% funded, an amount greater than 0.5% but no more than 1.5%, as set by the retirement board.”
Who is eligible and when it is paid
The statute adds: “if at least 36 monthly retirement benefit payments have been made prior to January 1 of the year in which the adjustment is to be made.” The TRS page says a recipient “will receive the GABA increase beginning with their next benefit, paid on the last business day of January.”
The funded ratio on file
The July 1, 2025 actuarial valuation says: “Since the funded ratio at July 1, 2025 of 73.44% is below 85% the Board’s Funding and Benefits policy does not currently support enhanced benefits.”
What the documents do not say
The TRS GABA page is undated and prints no year-by-year history. The valuation’s plan-provisions appendix restates the statutory GABA terms but prints no current Tier 2 rate, so the link between its funded ratio and the 0.5% Tier 2 rate comes from comparing it with the statute and the TRS page. A later valuation could change the Tier 2 amount, and board minutes were not searched.
Where 2027 stands
The January 2027 Montana TRS GABA is fixed by statute for Tier 1 at 1.5%; the Tier 2 amount stays at 0.5% only while the most recent valuation shows the system under 90% funded.
Common mistakes
- Expecting an index-linked COLA. TRS says GABA increases are not keyed to external economic variables.
- Applying 1.5% to Tier 2. Tier 2 gets 0.5% while the system is under 90% funded.
- Expecting a GABA before 36 monthly payments have been made.
Related: Montana TRS retirement decisions, how public pension decisions work, and whether Montana taxes pensions.
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Answer againSources
- Montana Teachers’ Retirement System, Guaranteed Annual Benefit Adjustment (What is GABA?): trs.mt.gov
- Montana Legislature (Montana Code Annotated 2025), MCA 19-20-719 Guaranteed annual benefit adjustment, rulemaking: leg.mt.gov
- Montana TRS (actuary report), Actuarial Valuation as of July 1, 2025, Teachers’ Retirement System of Montana: trs.mt.gov
- Related official page (not quoted): IRS Tax Topic 410, Pensions and annuities: www.irs.gov
- Related official page (not quoted): IRS Tax Topic 411, Pensions: the General Rule and the Simplified Method: www.irs.gov
Read from the primary documents linked above on October 30, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.