Effective January 1, 2018 as a member of the Teachers' Retirement System, state law requires that 8.25% of your annual salary be paid into the retirement fund as mandatory contributions. Although these are employee contributions, under the provisions of Section 414(h)(2) of the Internal Revenue Code, they are treated as employer contributions for federal tax purposes. The change in tax treatment of the contributions became effective July 1, 1991. This means that your mandatory contributions are paid to this system on a pre-tax basis while you are actively employed. Of the mandatory 8.25% contribution, 7% is posted into your membership account and 1.25% is posted to the Health Insurance Fund which helps reduce the cost of health insurance for eligible retired members and spouses.