Is the Georgia Teacher Retirement Plan a Tax-Deferred Pension Plan?
The Georgia Teacher Retirement Plan is a state-sponsored retirement plan benefiting teachers that work in Georgia. It is an established defined benefit plan, which means that if a participant meets the plan's service and age requirements, the teacher will receive a specified monthly benefit in retirement based on the teacher's earnings and years of service. The plan is established as a qualified plan under the Internal Revenue Code; therefore, it is a tax-deferred pension plan.
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What is a Qualified Plan?
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A qualified plan is a retirement plan that meets the requirements set forth in section 401(a) of the Internal Revenue Code. These plans are commonly called ERISA plans for the statute, the Employee Retirement Income Security Act of 1974, that jointly governs these plans with the Internal Revenue Code. In order to be qualified, a retirement plan must meet certain minimum coverage and participation requirements and vest benefits at a certain rate. There are distribution and disclosure requirements.
What Does it Mean to be a Tax-Deferred Pension Plan?
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Qualified plans are tax-deferred pension plans. If employers make contributions on behalf of their employees to a pension plan, the employees are not required to pay tax on those amounts in the year contributed. If employees make contributions to a pension plan, it is likely to be done on a pre-tax basis, which would reduce that taxpayer's tax liability. The employee would not be taxed on those contributions until he or she took a distribution in retirement. This deferral of taxation is the main benefit of a pension plan.
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Are There Special Rules as a Governmental Plan?
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Governmental plans are subject to special rules relating to pensions as governmental plans are not required to comply with Title I of ERISA. This exempts governmental plans from certain reporting and disclosure requirements. These plans are also exempted from ERISA's claims administration rules and the fiduciary provisions.
What Do You Need to Apply for your Georgia Teacher Pension?
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A few months prior to attaining your minimum retirement age under the Georgia Teacher Pension Plan, you should review the retirement handbook to determine what the current procedures are for applying for your benefits. As of 2011, in order to apply for your retirement benefit, you must fill out an application, a beneficiary designation, sick leave certification, retirement certification from your employer and federal and state tax withholding certificates.
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References
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