Thanks to the passage of ATPE-supported Senate Bill (SB) 10 by Sen. Joan Huffman (R–Houston), the Teacher Retirement System (TRS) of Texas is just weeks away from sending hundreds of thousands of retired educators the biggest onetime supplemental payment in TRS history. This is in addition to the cost-of-living adjustment (COLA) retirees will begin receiving in January 2024 pending the passage of a corresponding constitutional amendment on the ballot this November.

As previously reported on Teach the Vote, eligible retirees will receive the one-time stipend in an amount based on their age:

• A $7,500 one-time stipend to eligible annuitants 75 years of age and older; and
• A $2,400 one-time stipend to eligible annuitants aged 70 to 74.

To receive the supplemental payment, retirees must be eligible to receive a TRS annuity in the month of August 2023 and meet the qualifying age on or before Aug. 31, 2023.

Retirees receiving the larger $7,500 amount have the option to roll the funds over to another eligible retirement plan, with the goal of deferring income taxes on the amount rolled over.

According to TRS, a retiree who wishes to roll the funds over must complete and return the rollover election form that was included in the stipend notification letter they received from TRS. The form must be returned to TRS within 45 days of the date of the notification letter. TRS began mailing the notification letters July 10.

Retirees who do not wish to roll over the funds do not need to take any action.

Because this stipend is considered an eligible rollover distribution under federal law, TRS will withhold 20% and distribute the remainder of the stipend directly to retirees who do not choose to roll over the funds into another eligible tax deferred retirement plan.

The withholding rules that apply to a TRS retiree’s regular monthly annuity payment provide more flexible withholding options and even allow you to choose that no income tax be withheld from your monthly payment. However, those options do not exist for the withholding rules that apply to eligible rollover distributions. Instead, the law expressly requires TRS to withhold 20% from all payments that are eligible rollover distributions unless an individual elects to roll over the amount to an eligible retirement plan.

On the cusp of sending large highly publicized amounts to so many retirees, TRS reminds its members to be cautious and keep their personal financial information secure. Although TRS sometimes calls its members, retirees should be aware that TRS would not reach out to retirees to request the following types of information:

• Financial information such as bank account numbers;
• Personal information such as Social Security numbers; or
• Passwords.

If you are unsure whether a TRS communication is legitimate, you should reach out directly to at the agency at (800) 223-8778. For more information, please visit the 2023 TRS Retiree Benefit Enhancements Webpage.