Texas Teacher Retirement Mistakes to Avoid — 8 Errors That Cost You Money for Life

These Mistakes Are Permanent

Your annuity option and PLSO election become irreversible when your first annuity payment is issued. After that point, those elections cannot be changed. The errors below are the ones TRS counselors see most often — and every one of them costs money, coverage, or both, for the rest of your retirement.

1. Applying the Wrong Tier's Rules

TRS has six membership tiers, each with different eligibility thresholds, salary averaging periods, and PLSO rules. Tier 1 members can retire at the Rule of 80 with no minimum age. Tier 5 and 6 members need the Rule of 80 and must be at least 62. Reading a guide or blog post written for the wrong tier can lead you to retire years too early — and take a permanent actuarial reduction you didn't expect.

Verify your tier on your MyTRS Annual Statement before doing anything else.

2. Missing the Service Credit Purchase Deadline

Purchased service credit — withdrawn service, military time, out-of-state teaching, unreported substitute days — increases your monthly pension and can push you across eligibility thresholds. But every purchase must be paid in full before your retirement effective date. Not "in progress." Paid.

Starting the purchase process at month 3 instead of month 12 risks running out of time. If the payment doesn't clear before your effective date, the credit doesn't count.

3. Choosing the Wrong Annuity Option Under Pressure

The annuity option election — Standard, Option 1 through 5 — locks in permanently. Retirees who pick the Standard Annuity to maximize monthly income sometimes realize later that their spouse has no survivor protection. Others choose Option 1 for maximum survivor coverage and then feel the pinch of the reduced monthly check for decades.

Both choices are defensible. The mistake is making the decision on the day you sign Form TRS 31 without having worked through the numbers ahead of time with your spouse and, ideally, a fee-only financial planner.

4. Missing the 31-Day TRS-Care Enrollment Window

TRS-Care health insurance for retirees requires a minimum of 10 years of service credit and enrollment within 31 calendar days of your retirement effective date. Miss that window and you lose coverage until your second enrollment opportunity at age 65. That gap can mean years on COBRA or marketplace insurance at significantly higher premiums.

The 31-day deadline is absolute. Calendar it the day you pick your effective date.

5. Taking the PLSO as Cash Without Understanding the Tax Hit

If TRS pays your Partial Lump-Sum Option directly to you, it withholds $20,000 for federal taxes immediately on a $100,000 PLSO. If you're under 59½, you may also owe a separate 10% early-withdrawal penalty on the taxable amount.

A direct trustee-to-trustee rollover to an eligible traditional IRA, 403(b), or 457(b) defers tax and avoids immediate withholding and an immediate early-withdrawal penalty on the rolled amount.

6. Ignoring the Salary Cap in Final Years

TRS limits how much your creditable compensation can increase in the final years used for salary averaging. Compensation in the final 3 or 5 years (depending on tier) cannot exceed the prior year's creditable compensation by more than 10% or $10,000, whichever is greater — unless the increase comes from a statewide salary schedule adjustment or campus-wide promotion.

Taking a high-paying administrative role in your last two years may feel like a retirement boost, but if the increase exceeds the cap, TRS won't credit the excess in your benefit formula.

7. Forgetting About Social Security After the WEP/GPO Repeal

The Social Security Fairness Act, signed January 5, 2025, repealed both WEP and GPO. If you previously decided not to apply for Social Security benefits because those provisions would have reduced them to near-zero, you now need to file a new claim with the SSA. The adjustment is not automatic for people who never applied.

This is free money for eligible educators — but only if you take action.

8. Breaking the One-Month Return-to-Work Separation

Returning to work for a TRS-covered employer before completing a full calendar month of zero TRS-covered employment violates the required separation period. The break must be a complete calendar month — not 30 days, a full month with no TRS-covered work of any kind.

How to Protect Yourself

Start the process 12 months before your intended retirement date. Verify your tier. Audit your service credit. Get your official estimate. Work through the annuity option decision with your spouse before you sign anything.

The Texas TRS Retirement Guide walks through each of these decision points in order, with the exact forms, deadlines, and checklists that keep you from making an irreversible mistake.

See more Texas guides →