FAQs: One-Time Stipends

Senate Bill (SB) 10 and House Joint Resolution (HJR) 2 were passed by the 88th Texas Legislature in the 2023 regular session to provide two types of benefit enhancements to eligible retirees, beneficiaries, and alternate payees who are receiving a monthly annuity from TRS. The first is a one-time stipend for eligible annuitants who have reached age 70 by Aug. 31, 2023. The second is a one-time cost-of-living adjustment (COLA) for annuitants who retired on or before Aug. 31, 2020. As Proposition 9 (authorized by HJR2) was approved by Texas voters, pending eligibility, your annuity will increase permanently beginning with the January 2024 annuity payment that is payable on the last business day of the month.

SB 10 – A one-time stipend to be paid no later than the end of September 2023. An annuitant will receive the one-time stipend for the amount they're eligible for based on the annuitant's age. The amount of the stipend is the same regardless of the annuitant's monthly annuity amount or their retirement date. A $7,500 one-time stipend to eligible annuitants 75 years of age and older A $2,400 one-time stipend to eligible annuitants aged 70 to 74 Annuitants must be eligible to receive a TRS annuity in August 2023 and meet the qualifying age on or before Aug. 31, 2023. Examples: If a retiree turns 70 by Aug. 31, 2023, the retiree will be eligible for the $2,400 stipend. If the retiree turns 70 on or after Sept. 1, 2023, the retiree is not eligible for the $2,400 stipend. If a retiree turns 75 by Aug. 31, 2023, the retiree will be eligible for the $7,500 stipend. If the retiree turns 75 on or after Sept. 1, 2023, the retiree will be eligible for the $2,400 stipend. For a surviving spouse receiving an annuity as a beneficiary of a TRS member, the surviving spouse must turn 70 by Aug. 31, 2023 to be eligible for the $2,400 stipend . For a surviving spouse receiving an annuity as a beneficiary of a TRS member, the surviving spouse must turn 75 on or before Aug. 31, 2023 to be eligible for the $7,500 stipend. ​

Letters will be mailed from TRS to eligible annuitants advising them of eligibility, the amount they can expect to receive, and if it will be rollover eligible. Please note that not all annuitants will receive their notification letter at the same time due to special circumstances, such as annuitants who receive multiple annuities or annuitants who have legal orders that impact their annuity payments. For those eligible to receive the $7,500 stipend, this payment will be treated as a rollover eligible distribution. Details about how to elect a direct rollover and any applicable deadlines will be provided with the notification letter. If the $7,500 stipend is not rolled over, then a mandatory 20% rate of withholding of income tax will be applied to the payment. The stipend will be received in the same way in which annuitants currently receive their annuity payments (e.g., annuitants with direct deposit will receive their stipend via direct deposit). If an annuitant elects to roll over the stipend, the amount of income tax withholding, if any, depends on the type of rollover selected. Further details regarding the type of rollovers available and the applicable withholding rates that apply can be found on the rollover election form. TRS will mail a check to the annuitant made payable to the IRA or other employer plan selected for the annuitant to deposit with the IRA or employer plan. For annuitants eligible to receive the $2,400 stipend, this payment will not be treated as an eligible rollover distribution. Because this stipend is not rollover eligible, annuitants will receive the stipend in the same way in which they currently receive their annuity payment (e.g., annuitants with direct deposit will receive their stipend via direct deposit) and income tax withholding will be applied to the stipend based upon the Form W-4P TRS has on file or the default rate. You can update your income tax withholding preference by visiting MyTRS and selecting Modify Withholding Preference. If you do not have a MyTRS account, you may download, complete and mail Form W-4P to TRS. Depending on when they are received, withholding changes may not be adjusted in time for the stipend  

TRS is scheduled to begin issuing one-time stipends to eligible retirees in mid to late September 2023. The exact date you receive your payment may vary slightly due to your individual circumstances. In addition, for the protection of our members and their financial information, we do not broadcast exact dates. If you received a notification letter, please rest assured your payment will be on its way. Factors that may affect the timing of receiving your stipend: the method of receiving your payment (direct deposit, paper check by mail, rollover to another eligible retirement plan) as well as where you bank.​

As long as they are an eligible retiree receiving their TRS annuity, all position types will receive the COLA.  Recipients must be a TRS retiree receiving their annuity from TRS.​​​

TRS has already issued one-time stipends in 2023 as approved by the state legislature and we are preparing for the COLA. Recent reports of an additional "stimulus" payment are not accurate and we are working to ask the media outlets reporting this to correct it.

Senate Bill (SB) 10 and House Joint Resolution (HJR) 2 were passed by the 88th Texas Legislature in the 2023 regular session to provide two types of benefit enhancements to eligible retirees, beneficiaries, and alternate payees who are receiving a monthly annuity from TRS. The first is a one-time stipend for eligible annuitants who have reached age 70 by Aug. 31, 2023. The second is a one-time cost-of-living adjustment (COLA) for annuitants who retired on or before Aug. 31, 2020. As Proposition 9 (authorized by HJR2) was approved by Texas voters, pending eligibility, your annuity will increase permanently beginning with the January 2024 annuity payment that is payable on the last business day of the month.

SB 10 – A one-time stipend to be paid no later than the end of September 2023. An annuitant will receive the one-time stipend for the amount they're eligible for based on the annuitant's age. The amount of the stipend is the same regardless of the annuitant's monthly annuity amount or their retirement date. A $7,500 one-time stipend to eligible annuitants 75 years of age and older A $2,400 one-time stipend to eligible annuitants aged 70 to 74 Annuitants must be eligible to receive a TRS annuity in August 2023 and meet the qualifying age on or before Aug. 31, 2023. Examples: If a retiree turns 70 by Aug. 31, 2023, the retiree will be eligible for the $2,400 stipend. If the retiree turns 70 on or after Sept. 1, 2023, the retiree is not eligible for the $2,400 stipend. If a retiree turns 75 by Aug. 31, 2023, the retiree will be eligible for the $7,500 stipend. If the retiree turns 75 on or after Sept. 1, 2023, the retiree will be eligible for the $2,400 stipend. For a surviving spouse receiving an annuity as a beneficiary of a TRS member, the surviving spouse must turn 70 by Aug. 31, 2023 to be eligible for the $2,400 stipend . For a surviving spouse receiving an annuity as a beneficiary of a TRS member, the surviving spouse must turn 75 on or before Aug. 31, 2023 to be eligible for the $7,500 stipend. ​

Letters will be mailed from TRS to eligible annuitants advising them of eligibility, the amount they can expect to receive, and if it will be rollover eligible. Please note that not all annuitants will receive their notification letter at the same time due to special circumstances, such as annuitants who receive multiple annuities or annuitants who have legal orders that impact their annuity payments. For those eligible to receive the $7,500 stipend, this payment will be treated as a rollover eligible distribution. Details about how to elect a direct rollover and any applicable deadlines will be provided with the notification letter. If the $7,500 stipend is not rolled over, then a mandatory 20% rate of withholding of income tax will be applied to the payment. The stipend will be received in the same way in which annuitants currently receive their annuity payments (e.g., annuitants with direct deposit will receive their stipend via direct deposit). If an annuitant elects to roll over the stipend, the amount of income tax withholding, if any, depends on the type of rollover selected. Further details regarding the type of rollovers available and the applicable withholding rates that apply can be found on the rollover election form. TRS will mail a check to the annuitant made payable to the IRA or other employer plan selected for the annuitant to deposit with the IRA or employer plan. For annuitants eligible to receive the $2,400 stipend, this payment will not be treated as an eligible rollover distribution. Because this stipend is not rollover eligible, annuitants will receive the stipend in the same way in which they currently receive their annuity payment (e.g., annuitants with direct deposit will receive their stipend via direct deposit) and income tax withholding will be applied to the stipend based upon the Form W-4P TRS has on file or the default rate. You can update your income tax withholding preference by visiting MyTRS and selecting Modify Withholding Preference. If you do not have a MyTRS account, you may download, complete and mail Form W-4P to TRS. Depending on when they are received, withholding changes may not be adjusted in time for the stipend  

TRS is scheduled to begin issuing one-time stipends to eligible retirees in mid to late September 2023. The exact date you receive your payment may vary slightly due to your individual circumstances. In addition, for the protection of our members and their financial information, we do not broadcast exact dates. If you received a notification letter, please rest assured your payment will be on its way. Factors that may affect the timing of receiving your stipend: the method of receiving your payment (direct deposit, paper check by mail, rollover to another eligible retirement plan) as well as where you bank.​

As long as they are an eligible retiree receiving their TRS annuity, all position types will receive the COLA.  Recipients must be a TRS retiree receiving their annuity from TRS.​​​

Yes, the stipend will be treated as taxable income in the year paid. The payment amount will be reported with your annuity payments on your 2023 IRS Form 1099-R or 1042-S.​​

If you have income tax withholding applied to your September annuity payment, the withholding amount will not be affected by the one-time stipend. Any additional taxes due as a result of the stipend will be deducted from your stipend and not your September annuity payment.​​

If you are a U.S. citizen or resident alien, income taxes will be withheld based upon the withholding certificate (Form W-4P or TRS228A) on file with TRS or the default rate. 

You can update your income tax withholding preference by visiting MyTRS and selecting Modify Withholding Preference. If you do not have a MyTRS account, you may download, complete and mail Form W-4P to TRS. Depending on when the form is received, withholding changes may not be updated in time for the stipend.

TRS will withhold income taxes at the required rate of 30% unless you have a valid IRS Form W-8BEN on file with TRS and qualify for a reduced rate of withholding under an income tax treaty. ​​​​

This stipend is not rollover eligible. Based on the amount of this stipend, TRS has determined that it is not rollover eligible under federal law.​

Yes, the stipend will be treated as taxable income in the year paid. The payment amount will be reported with your annuity payments on your 2023 IRS Form 1099-R or 1042-S.​​

If you have income tax withholding applied to your September annuity payment, the withholding amount will not be affected by the one-time stipend. Any additional taxes due as a result of the stipend will be deducted from your stipend and not your September annuity payment.​​

If you are a U.S. citizen or resident alien, income taxes will be withheld based upon the withholding certificate (Form W-4P or TRS228A) on file with TRS or the default rate. 

You can update your income tax withholding preference by visiting MyTRS and selecting Modify Withholding Preference. If you do not have a MyTRS account, you may download, complete and mail Form W-4P to TRS. Depending on when the form is received, withholding changes may not be updated in time for the stipend.

TRS will withhold income taxes at the required rate of 30% unless you have a valid IRS Form W-8BEN on file with TRS and qualify for a reduced rate of withholding under an income tax treaty. ​​​​

Based on the amount of this stipend, TRS has determined that this stipend is rollover eligible under federal law, and you may roll over all or a portion of the payment into another eligible retirement plan. To do so, complete and return the rollover election form included with your notification letter. You would complete Section 1 of the form and your financial representative would complete Section 2. The form must be returned to TRS within 45 days from the date of the letter. You do not need to take any action if you do not want to roll over any of the funds into another eligible retirement plan. While the form has an option for you to indicate that you do not wish to roll over your stipend, you do not need to complete the form. TRS will withhold the required 20% and distribute the stipend directly to you.​

Generally, yes, the stipend will be treated as taxable income in the year the stipend is paid. However, because this stipend is rollover eligible, you may defer the recognition of income tax by electing to roll the amount over to another eligible retirement plan and income tax will ultimately be recognized in the tax year it is distributed from the rollover account. If you do not elect to roll over, then the amount will be taxable in the year it is distributed.

If you do not roll over the stipend, then the stipend is subject to a mandatory 20% rate of income tax withholding.

Because this stipend is considered an eligible rollover distribution under federal law, different withholding rules apply to the stipend than to other types of payments you may receive from TRS, such as your monthly annuity. The withholding rules that apply to your 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.

No, TRS treats your monthly annuity payments as first satisfying any RMD for your TRS benefit, so the entire amount of the stipend will remain rollover eligible.

If you are an annuitant eligible to receive the stipend because of a TRS member's death and you are the member’s surviving spouse, you are a spouse beneficiary for that rollover eligible payment. If you are not a spouse beneficiary, then you would be considered a non-spouse beneficiary for that rollover eligible payment.

Yes, generally as a non-spouse beneficiary, you are still eligible to roll over the $7,500 stipend payment into another eligible retirement plan. However, you may only roll over the funds to a traditional IRA or Roth IRA that will be treated as an inherited IRA. Please inform the financial institution you select as your IRA custodian that you wish to make a rollover as a non-spouse beneficiary in order to establish your IRA correctly.

No. Because different tax rules apply to rolled over funds you receive as a non-spouse beneficiary, funds you receive as a non-spouse beneficiary are only eligible to be rolled over to an inherited IRA and cannot be rolled over into your own retirement account such as a 401(k), 403(b), or IRA. However, funds you receive as a retiree or as spouse beneficiary can be rolled over into a personal retirement account. If you receive a stipend as both a retiree or spouse beneficiary and as a non-spouse beneficiary, you will receive two different rollover election forms that provide the available rollover options for each type of payment.

Yes, you may roll over the stipend to a U.S. eligible retirement plan. You cannot roll over the stipend to a non-U.S. retirement plan.

TRS will withhold income taxes at the required rate of 30% unless you have a valid IRS Form W-8BEN on file with TRS and qualify for a reduced rate of withholding under an income tax treaty. ​​​​​​​​​​​​

No action is required. While the form has an option for you to indicate that you do not wish to roll over your stipend, you do not need to complete the form.  TRS will withhold the required 20% and distribute the stipend directly to you.​

Based on the amount of this stipend, TRS has determined that this stipend is rollover eligible under federal law, and you may roll over all or a portion of the payment into another eligible retirement plan. To do so, complete and return the rollover election form included with your notification letter. You would complete Section 1 of the form and your financial representative would complete Section 2. The form must be returned to TRS within 45 days from the date of the letter. You do not need to take any action if you do not want to roll over any of the funds into another eligible retirement plan. While the form has an option for you to indicate that you do not wish to roll over your stipend, you do not need to complete the form. TRS will withhold the required 20% and distribute the stipend directly to you.​

Generally, yes, the stipend will be treated as taxable income in the year the stipend is paid. However, because this stipend is rollover eligible, you may defer the recognition of income tax by electing to roll the amount over to another eligible retirement plan and income tax will ultimately be recognized in the tax year it is distributed from the rollover account. If you do not elect to roll over, then the amount will be taxable in the year it is distributed.

If you do not roll over the stipend, then the stipend is subject to a mandatory 20% rate of income tax withholding.

Because this stipend is considered an eligible rollover distribution under federal law, different withholding rules apply to the stipend than to other types of payments you may receive from TRS, such as your monthly annuity. The withholding rules that apply to your 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.

No, TRS treats your monthly annuity payments as first satisfying any RMD for your TRS benefit, so the entire amount of the stipend will remain rollover eligible.

If you are an annuitant eligible to receive the stipend because of a TRS member's death and you are the member’s surviving spouse, you are a spouse beneficiary for that rollover eligible payment. If you are not a spouse beneficiary, then you would be considered a non-spouse beneficiary for that rollover eligible payment.

Yes, generally as a non-spouse beneficiary, you are still eligible to roll over the $7,500 stipend payment into another eligible retirement plan. However, you may only roll over the funds to a traditional IRA or Roth IRA that will be treated as an inherited IRA. Please inform the financial institution you select as your IRA custodian that you wish to make a rollover as a non-spouse beneficiary in order to establish your IRA correctly.

No. Because different tax rules apply to rolled over funds you receive as a non-spouse beneficiary, funds you receive as a non-spouse beneficiary are only eligible to be rolled over to an inherited IRA and cannot be rolled over into your own retirement account such as a 401(k), 403(b), or IRA. However, funds you receive as a retiree or as spouse beneficiary can be rolled over into a personal retirement account. If you receive a stipend as both a retiree or spouse beneficiary and as a non-spouse beneficiary, you will receive two different rollover election forms that provide the available rollover options for each type of payment.

Yes, you may roll over the stipend to a U.S. eligible retirement plan. You cannot roll over the stipend to a non-U.S. retirement plan.

TRS will withhold income taxes at the required rate of 30% unless you have a valid IRS Form W-8BEN on file with TRS and qualify for a reduced rate of withholding under an income tax treaty. ​​​​​​​​​​​​

The monthly benefit types that are excluded are: Disability retirement with less than ten years of service Survivor $250 and $350 payments DROP payments

No, insurance premiums will not be deducted from the one-time stipend.

Generally, no, you cannot waive the payment. However, if you are a beneficiary who has not begun to receive your monthly annuity, you may be eligible to waive the stipend. You may contact TRS for more information.

Yes, if you are eligible to receive the stipend and receive more than one qualifying annuity, then you will receive more than one stipend.​​​​

There are several reasons why you may not have received your stipend yet: If you qualify for a $7,500 stipend, did you recently submit a rollover form? If so, it can take up to 30 days from receipt of the rollover form to process your payment. Some payments might take longer depending on the situation. If your TRS payment is impacted by a legal order such as a qualified domestic relations order or tax levy, this could delay your payment as well. Certain other unique situations can cause delays in the receipt of your payment. If you are eligible to receive the stipend and have verified that you have not received payment, please contact the TRS Telephone Counseling Center for more information regarding the status of your payment (1-800-223-8778, Monday – Friday, 7 a.m. – 6 p.m.).​​ ​​​​​

If you are eligible to receive a qualifying annuity for August 2023 and meet the age requirements of SB 10, you will be eligible to receive a stipend even if you don’t receive that annuity payment in August.

The monthly benefit types that are excluded are: Disability retirement with less than ten years of service Survivor $250 and $350 payments DROP payments

No, insurance premiums will not be deducted from the one-time stipend.

Generally, no, you cannot waive the payment. However, if you are a beneficiary who has not begun to receive your monthly annuity, you may be eligible to waive the stipend. You may contact TRS for more information.

Yes, if you are eligible to receive the stipend and receive more than one qualifying annuity, then you will receive more than one stipend.​​​​

There are several reasons why you may not have received your stipend yet: If you qualify for a $7,500 stipend, did you recently submit a rollover form? If so, it can take up to 30 days from receipt of the rollover form to process your payment. Some payments might take longer depending on the situation. If your TRS payment is impacted by a legal order such as a qualified domestic relations order or tax levy, this could delay your payment as well. Certain other unique situations can cause delays in the receipt of your payment. If you are eligible to receive the stipend and have verified that you have not received payment, please contact the TRS Telephone Counseling Center for more information regarding the status of your payment (1-800-223-8778, Monday – Friday, 7 a.m. – 6 p.m.).​​ ​​​​​

Medicaid provides medical benefits to certain individuals. The Federal government establishes general guidelines for the administration of Medicaid benefits, and each individual state determines specific eligibility requirements to receive the benefits. Thus, a person who is eligible for Medicaid in one state may not qualify in another state. For purposes of Medicaid, the one-time stipend will be counted as "unearned income" for the month of receipt. There may be options available to "spend down" the stipend before the end of the month or establish a trust and maintain Medicaid eligibility. There may be other considerations for individuals in a long-term care facility. If you think this may impact your ability to qualify for Medicaid, we recommend you contact your local Medicaid office.​

No. Employees who receive a government pension from employment in positions that are not covered by Social Security may have their Social Security benefits reduced under a provision called the Windfall Elimination Provision ("WEP"). The WEP is a reduction to your Social Security retirement benefit because of the pension earned from your TRS-covered employment. However, the one-time stipend does not impact the calculation of the WEP. Therefore, the payment should not have any impact on your Social Security retirement benefits.

Potentially. Employees who receive a government pension from employment in positions that are not covered by Social Security may have their Social Security benefits reduced under a provision called the Government Pension Offset ("GPO"). The GPO is a reduction to your Social Security spouse or survivor benefits because of the pension earned from your TRS-covered employment. The GPO calculation is based on the amount of your government pension. Depending on your personal circumstances, it is possible that the one-time stipend could result in a reduction to your monthly spouse or survivor benefits from Social Security. If this impacts you, you should receive notice from your local Social Security office.

No. The one-time stipend will not affect your eligibility to receive Social Security. However, for some individuals, it is possible that the one-time stipend could require the individual to pay income tax on a portion of your Social Security benefit. The Social Security Administration estimates that about 40% of people who receive Social Security pay income tax on their benefits. If you think this may impact you, we recommend that you contact your local Social Security office or speak with your tax or financial advisor or accountant.

SSI pays benefits to aged, blind, and disabled people who have limited income and resources. SSI is administered by the federal government but may be supplemented by an individual State. For purposes of SSI, income is anything you receive during a calendar month that is used or could be used to meet your needs for food or shelter. Income is determined for each calendar month of eligibility. For purposes of SSI income, the one-time stipend is considered "unearned income." It is possible that the payment could cause you to exceed the federal benefit rate and any state supplemental rate. If you think this may impact you, please contact your local Social Security office.

It depends on which benefits you currently receive or are currently eligible to receive or in which programs you are eligible to participate. You should contact the relevant programs for further information regarding how the one-time stipend could impact your benefits.​​​​

No. The one-time stipend will not affect your eligibility for Medicare. It is possible (but not likely) that the additional payment could cause some individuals to be "high-income" individuals for Medicare premium purposes. In general, certain high-income individuals pay higher premiums for Medicare Part B (medical insurance) and Medicare prescription drug coverage premiums. The higher premiums affect less than 5% of the people with Medicare.

Medicaid provides medical benefits to certain individuals. The Federal government establishes general guidelines for the administration of Medicaid benefits, and each individual state determines specific eligibility requirements to receive the benefits. Thus, a person who is eligible for Medicaid in one state may not qualify in another state. For purposes of Medicaid, the one-time stipend will be counted as "unearned income" for the month of receipt. There may be options available to "spend down" the stipend before the end of the month or establish a trust and maintain Medicaid eligibility. There may be other considerations for individuals in a long-term care facility. If you think this may impact your ability to qualify for Medicaid, we recommend you contact your local Medicaid office.​

No. Employees who receive a government pension from employment in positions that are not covered by Social Security may have their Social Security benefits reduced under a provision called the Windfall Elimination Provision ("WEP"). The WEP is a reduction to your Social Security retirement benefit because of the pension earned from your TRS-covered employment. However, the one-time stipend does not impact the calculation of the WEP. Therefore, the payment should not have any impact on your Social Security retirement benefits.

Potentially. Employees who receive a government pension from employment in positions that are not covered by Social Security may have their Social Security benefits reduced under a provision called the Government Pension Offset ("GPO"). The GPO is a reduction to your Social Security spouse or survivor benefits because of the pension earned from your TRS-covered employment. The GPO calculation is based on the amount of your government pension. Depending on your personal circumstances, it is possible that the one-time stipend could result in a reduction to your monthly spouse or survivor benefits from Social Security. If this impacts you, you should receive notice from your local Social Security office.

No. The one-time stipend will not affect your eligibility to receive Social Security. However, for some individuals, it is possible that the one-time stipend could require the individual to pay income tax on a portion of your Social Security benefit. The Social Security Administration estimates that about 40% of people who receive Social Security pay income tax on their benefits. If you think this may impact you, we recommend that you contact your local Social Security office or speak with your tax or financial advisor or accountant.

SSI pays benefits to aged, blind, and disabled people who have limited income and resources. SSI is administered by the federal government but may be supplemented by an individual State. For purposes of SSI, income is anything you receive during a calendar month that is used or could be used to meet your needs for food or shelter. Income is determined for each calendar month of eligibility. For purposes of SSI income, the one-time stipend is considered "unearned income." It is possible that the payment could cause you to exceed the federal benefit rate and any state supplemental rate. If you think this may impact you, please contact your local Social Security office.

It depends on which benefits you currently receive or are currently eligible to receive or in which programs you are eligible to participate. You should contact the relevant programs for further information regarding how the one-time stipend could impact your benefits.​​​​