One-time Supplemental Payment FAQs

New! 1. I received a letter in February stating my monthly annuity payment has changed. Why?

TRS mails these letters any time your net pay changes in a month. They include a detailed summary of your monthly annuity beginning in February.

These totals show the changes in the IRS withholding for your February and future annuity payments in 2022. Unless you make a change to your TRS withholding preference or your TRS income changes, the withholding amount you see in February should be consistent throughout the remainder of the calendar year.

Please note that the additional withholding due to the supplemental payment in your January annuity payment will not be present in your February annuity payment. Your February annuity payment should have approximately the same tax withholding as your December annuity payment, but keep in mind you may see a nominal change in the amount because of the new 2022 IRS withholding tables (pdf).

2. The tax withholding in my January annuity check and/or supplemental payment was more than I expected. Why?

Because you received two payments in January a higher rate of income tax withholding likely applied. Generally, income tax withheld from an annuity payment will be based on a retiree’s total monthly taxable income. If a retiree receives more income in a month, a higher rate of income tax withholding will apply. This means when retirees received an additional payment in January, their total monthly income increased and so did their rate of withholding. This higher rate resulted in the increase in withholding that you saw in your January payments.

3. I heard that our annuity payments would be back to normal in February, but now I'm hearing that they'll be reduced. Is this true?

No. The additional withholding due to the supplemental payment in your January annuity payment will not be present in your February annuity payment. Your February annuity payment should have approximately the same tax withholding as your December annuity payment, but keep in mind you may see a nominal change in the amount because of the new 2022 IRS tax withholding tables. Unless you make a change to your TRS withholding preference or your TRS income changes, the withholding amount you see in February should be consistent throughout the remainder of the calendar year.

For more information, please refer to the 2022 IRS withholding tables (pdf) linked to the TRS website. Additionally, TRS members can calculate their own withholding amounts by using the using the withholding calculator in MyTRS.

4. How might the one-time supplemental payment affect my January annuity payment tax deductions?

Because you are receiving the one-time supplemental payment you may notice an increase in the income tax withholding on your January annuity payment. This increased tax withholding is likely a result of receiving two payments in the month of January. Income tax withholding for your annuity payment is based on your total monthly taxable income. So if a retiree receives more income in a month, a higher rate of income tax withholding may apply. If you see a higher withholding amount for your January annuity payment, it is likely because receiving the supplemental payment in addition to your annuity payment increased your rate of withholding for the month of January. Your withholding rate will return to normal on your February payment. Lastly please note, the IRS released new annual tax withholding tables at the end of December that were applied to the January payments, so you may also notice those nominal adjustments to your withholding amount.

In February, TRS will send out a new letter with a comparative summary of the January and February annuity payments. This will show the changes in the IRS withholding for your February and future annuity payments in 2022.

5. When will I receive the one-time supplemental payment?

If you are eligible, you will receive a one-time supplemental payment equal to your annuity payment or $2,400, whichever is less. Payments will be issued on Jan. 14, 2022 in the same manner in which you receive your annuity payment.

6. Who is eligible to receive the supplemental payment?

8. Why is the supplemental payment not being issued sooner?

Once the bills authorizing and funding the supplemental payment take effect, the funds to issue the supplemental payment must be received and certified by TRS and programming must take place to distribute the amounts. The 2022 supplemental payment will use the retiree’s current tax withholding. Based on prior member feedback, a January disbursement date will defer taxation on the one-time supplemental payment to the 2022 tax year. This will provide eligible annuitants additional time to make any necessary tax or financial planning adjustments for the subsequent tax year.

9. Is the supplemental payment treated as taxable income?

Yes, generally a one-time supplemental payment is treated as taxable income to an eligible annuitant.

10. Will health care premiums be deducted from the one-time supplemental payment?

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

11. How will TRS determine my tax withholding for the supplemental payment and where can I go to change my tax withholding

TRS will withhold the annuitant’s preferred withholding as indicated on the most recent TRS Form 228A TRS has on file. However, if TRS does not have a Form 228A on file for an eligible annuitant, then TRS will apply the default withholding (married and claimed three withholding exemptions) to the one-time supplemental payment. 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 228A (pdf) to TRS. Depending on when they are received, withholding changes may not be adjusted in time for the supplemental payment.

12. Can I waive or disclaim my right to receive the supplemental payment?

No. Under federal tax law, the supplemental payment is considered part of your monthly annuity benefit. Because you have already begun receiving your monthly benefit, you cannot waive the supplemental payment.

13. Will the supplemental payment impact benefits I receive or my eligibility for federal programs?

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 supplemental payment could impact your benefits.

14. Will the supplemental payment affect my eligibility for Medicare?

For most members and beneficiaries, this should not be an issue. The supplemental payment 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.

15. Will the supplemental payment affect my eligibility for the Social Security retirement income program?

No. The supplemental payment will not affect your eligibility to receive Social Security. However, for some individuals, it is possible that the supplemental payment could require the individual to pay income tax on the 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 accountant or tax or financial advisor.

16. Will the supplemental payment affect my eligibility for Medicaid?

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 supplemental payment will be counted as "unearned income" for the month of receipt. There may be options available to "spend down" the supplemental payment 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.

17. Will the supplemental payment affect my eligibility for Supplemental Security Income ("SSI")?

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 supplemental payment is considered "unearned income." It is possible that the supplemental 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.

18. Will the supplemental payment impact the amount of retirement benefits I receive from Social Security?

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 supplemental payment does not impact the calculation of the WEP. Therefore, the payment should not have any impact on your Social Security retirement benefits.

19. Will the supplemental payment impact the amount of spouse or survivor benefits I receive from Social Security?

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 supplemental payment 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.