How the Plan Works

Each county and district that participates in TCDRS has its own retirement plan, and each employer decides the level of benefit it provides. Your plan is funded by deposits from you, contributions from your employer and earnings from investments.

As a member of TCDRS, this is how the plan works for you.

  1. A percentage of your paycheck is deposited into your TCDRS account. That percentage (from 4% to 7%) is set by your employer.
  2. Your savings grow at an annual, compounded rate of 7% interest.
  3. Once you retire, you receive a benefit payment for life that is based on your final account balance and employer matching.

Every time you get a paycheck, a certain percentage of your money is deposited in your TCDRS account. The money you deposit is not taxed until you withdraw it or choose a retirement benefit.

The money in your TCDRS account grows at an annual compound interest rate of 7%. TCDRS credits this interest to your account each month based on your account balance as of Jan. 1. This chart shows you an example of the 7% growth.

How Your Account Earns Interest

Year Jan.1 Beginning Balance Deposits 7% Interest Jan.1 Balance Ending Balance
Year 1 $0 $2,000 $0 $2,000
Year 2 $2,000 $2,000 $140 $4,140
Year 3 $4,140 $2,000 $289 $6,429

Over time, the value of your account can increase a great deal due to compound interest, which is interest paid on your deposits and the interest you've already earned. At 7%, your money will approximately double every 10 years.

Every year you'll get a statement from TCDRS that lists all deposits for the year and the interest you have earned. If you're a TCDRS member, you can view your account online when you sign in.


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