(a) For members who on or before August 31, 2005 had attained the age of 50, had at least 25 years of service credit, or whose combined age and service credit equaled 70 or greater, TRS excludes from creditable compensation any amount of otherwise eligible compensation that represents amounts converted into salary and wages from noncreditable compensation to be received in any of the last three school years prior to retirement. Amounts excluded under this subsection are excluded in the year of conversion and each subsequent year until retirement.
(b) For members who on or before August 31, 2005 did not meet the requirements of subsection (a) of this section, TRS excludes from creditable compensation any amount of otherwise eligible compensation that represents amounts converted into salary and wages from noncreditable compensation to be received in any of the last five school years prior to retirement. Amounts excluded under this subsection are excluded in the year of conversion and each subsequent year until retirement.
(c) For purposes of this section, conversion occurs when an employer agrees to pay a member with creditable compensation for services performed in the future that in the past were paid by that employer with noncreditable compensation. Compensation in the form of accrued paid leave or accrued compensatory time for overtime worked cannot be converted to eligible compensation and is expressly excluded from creditable compensation at any time.
(d) The employer certifies whether compensation was converted in the last three school years prior to retirement for those members meeting the requirements of subsection (a) of this section and whether compensation was converted in the last five school years prior to retirement for those members who do not meet the requirements of subsection (a) of this section.
(e) Only compensation converted after the 2005-2006 school or contract year will be excluded under this section.
(f) TRS will adjust a member's annual compensation at the time of retirement to comply with the requirements of subsection (a) of this section and refund the member contributions on excluded amounts. The refund will be made after the date on which TRS makes the first annuity payment.
(g) If compensation is excluded under subsection (a) or (b) of this section, the member may provide additional information in the form of written documentation to demonstrate that the compensation should not be excluded. TRS makes the final determination regarding the characterization of compensation as creditable or noncreditable.
(h) Upon the request of TRS, the employer shall provide documents or records evidencing characterization of the compensation.

Source Note: The provisions of this §25.30 adopted to be effective January 31, 2006, 31 TexReg 553; amended to be effective September 1, 2011, 36 TexReg 5369