Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
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Updated August 19, 2026. Quick answer: Teacher Retirement System of Texas (TRS Texas) — the COLA is ad hoc (legislature only), and whether it compounds is not stated, service credit can be purchased, and no DROP was found. Vesting takes five years of membership service credit. The four decisions below are the ones that are hard to reverse.
The verdicts
| Is the COLA granted? | Ad hoc (legislature only) |
|---|---|
| Is the COLA compounded? | Unstated |
| Vesting | Five years of membership service credit. Note that TRS’s own handbook NEVER uses the words ‘vest’ or ‘vesting’ – it says ‘Members who have at least five years of membership service credit are eligible to retire and receive a lifetime monthly annuity when they meet the applicable age requirement.’ |
| Buy service credit? | Yes |
| DROP? | None found |
| State | Texas |
Those first two rows are separate questions and are routinely confused. Whether you get an increase at all is one thing; whether it compounds is another. A system can grant an increase automatically every year and still compute it against your original pension forever, which is a materially worse deal than it sounds.
The COLA
No automatic COLA of any kind. Handbook, verbatim: ‘The TRS retirement plan does not provide for regular cost-of-living increases to the amount of your annuity. Any post-retirement increase in benefits must be authorized by the Texas Legislature.’ The most recent increase was paid January 2024 under SB 10 and HJR 2 (88th Legislature, 2023), contingent on voter approval of the constitutional amendment in November 2023, and was tiered by RETIREMENT-DATE COHORT rather than by membership tier: 6% for those who retired on or before 31 August 2001, 4% for 1 September 2001 to 31 August 2013, and 2% for 1 September 2013 to 31 August 2020. TRS’s 2025 legislative-session summary records no COLA.
Buying service credit
Payment by lump sum (after tax), installments (after tax; not available for state sick/personal leave or USERRA), or rollover of pre-tax funds from another eligible retirement plan including a direct trustee-to-trustee transfer from a governmental 403(b) or 457(b). CORRECTION TO A COMMON CLAIM: there is no verifiable 2005 change moving purchase cost to an actuarial basis. The only dated methodology change in TRS’s own materials is 1 September 2015; 2005 is the grandfathering cutoff for retirement tiers, and the two appear to be routinely conflated.
What it costs. Actuarial present value at the time of deposit of the additional retirement benefits, based on actuarial tables adopted by the board of trustees. The current formula has been in effect since 1 SEPTEMBER 2015 and is based on the member’s age, years of TRS service credit, compensation, and a cost factor based on tier placement – so the dollar cost varies by tier even where eligibility rules do not.
Run your own numbers before deciding — some purchases never recover their cost, and the calculator shows which.
Taking a refund
A refund returns the member’s own contributions plus interest, plus any amounts voluntarily paid to purchase service credit. No employer or state contribution is refunded. Handbook: ‘By refunding your account and ending your membership, you lose your service credit and forfeit any retirement benefits (including retirement health care benefits)’ – TRS-Care is lost with it. Members with 5 or more years must sign a NOTARIZED WAIVER on form TRS 6 acknowledging they are waiving future retirement benefits. Reinstatement is possible at a ‘Reinstatement Fee of 8%, Compounded Annually, from the Date of the Withdrawal to the Date of Redeposit’. THE HIDDEN COST: even after successful reinstatement, the member’s tier ENTRY DATE resets to the first day of TRS-covered employment after the last refund, so the original and generally more favourable tier is permanently lost, and any post-refund re-employment is subject to minimum age 62 for unreduced retirement and costlier early-age reduction schedules.
This is the irreversible one. Refund versus leaving it in sets out the decision in the order it should be made.
Texas grants an increase only when the legislature votes one.
TRS Texas has no automatic adjustment, so your first pension payment holds its purchasing power only for as long as the legislature keeps acting. Planning for the version where it does not is the conservative reading. The matching service below introduces you to advisers who pay to meet you.
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DROP
No DROP is available to members retiring today. The September 2025 handbook and the Service Credit brochure contain no DROP section, no mechanics and no election process. DROP appears only twice in the whole handbook: once in the grandfathered-member rules ('you are eligible to elect PLSO if you are eligible to receive an unreduced service retirement annuity and you are not a DROP participant') and once in generic tax boilerplate. That phrasing reads as a closed legacy programme with a residual population, but TRS publishes NO page stating a closure date or history, so the closure itself is INFERENCE, not a verified fact.
This is an absence-of-evidence finding: it means a DROP does not appear in the materials reviewed, not that the system has published a denial. DROP is rarer than it appears — of the twelve systems checked for this guide, only one has an active programme.
Survivor options
Standard Annuity plus five options: One (100% joint and survivor), Two (50% joint and survivor), Three (60-month guaranteed period), Four (120-month guaranteed period), Five (75% joint and survivor). Joint-and-survivor options allow only one beneficiary and apply an IRS-based 'adjusted age difference' test that can disqualify a much younger non-spouse beneficiary. The plan election is generally locked for life; the narrow exceptions (marriage after retirement, a single permitted beneficiary change, a trust-to-named-beneficiary swap, or downgrading to the Standard Annuity) are each one-time, delayed, consent-gated, or themselves irreversible - the handbook states of the downgrade: 'This change to your retirement plan cannot be reversed.'
What could not be verified
Sourced from the TRS Benefits Handbook 'A Member's Right to Know' (all 60 pages extracted) and the TRS Service Credit brochure (all 24 pages), both official TRS publications. TWO CAVEATS. First, the handbook is internally inconsistent: its cover reads 'September 2025' but page 60 states 'This edition is based upon TRS plan terms in effect as of May 1, 2022', so dollar figures inside may be stale. Second, statutes.capitol.texas.gov returned only its navigation shell on every attempt, so NO Texas Government Code section numbers are independently verified here. trstx.org has an expired certificate and was abandoned as a source.
These gaps are stated because a plan-rule page that hides its own limits is worse than no page. Your member handbook is the authority, and where it and this page disagree, the handbook wins.
Sources
- https://trs.texas.gov/files/documents/benefits-handbook.pdf
- https://www.trs.texas.gov/files/migrated/brochure_texas_service_credit.pdf
- https://www.trs.texas.gov/pension-benefits/know-benefits/understand-benefits/membership-tiers
- https://www.trs.texas.gov/about/legislative/legislative-materials/2023-trs-related-legislation-summary
- https://www.trs.texas.gov/about/legislative/legislative-materials/2025-trs-related-legislation-summary
Read 2026-08-04.
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Related: buyback calculator · is buying service credit worth it · refund or leave it in · DROP explained.
General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named. Powers of attorney, guardianship and trusts are governed by STATE law and differ change, and interest rates published by the IRS change every month - never rely on a rate quoted on any page, including this one. We are not a law firm or a tax adviser, and this is not legal or tax advice.