Texas Teacher Retirement System One-time Stipend for Retirees: Check Your Eligibility

Texas Teacher Retirement System One-time Stipend for Retirees: Check Your Eligibility

Senate Bill (SB) 10 was passed by the Texas Legislature in the 2023 regular session to provide a benefit enhancement to eligible retirees, beneficiaries, and alternate payees who are receiving a monthly annuity from TRS. The benefit is a one-time stipend for eligible annuitants who have reached age 70 by Aug. 31, 2023.

SB 10 is a one-time stipend to be paid no later than the end of September 2023. An annuitant will receive the stipend based on their age. The amount of the stipend is the same regardless of the annuitant's monthly annuity amount or their retirement date. Eligible annuitants 75 years of age and older will receive a $7,500 stipend. Eligible annuitants aged 70 to 74 will receive a $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.​

TRS began mailing notification letters to annuitants on July 10 and electronic copies of the letter were made available on July 12 for annuitants to access online on the MyTRS website.

The $2,400 stipend for annuitants ages 70 – 74 will be taxable for 2023. TRS will withhold taxes at the same rate as the annuitant’s regular monthly annuity payments.

The $7,500 stipend for annuitants ages 75 and older is “Rollover eligible” – this means recipients can defer taxes by electing to roll all or part of their stipend into an IRA or another eligible retirement plan. A rollover election form accompanied the notification letter. This form must be completed and returned to TRS within 45 days from the date of the letter. If the rollover election form is not received by TRS within 45 days, TRS will issue the taxable payment directly to the annuitant and will withhold 20% for federal taxes.

The stipend will not affect eligibility for Medicare, but it may potentially affect Medicare Part B and Part D premiums. These premiums are determined by modified adjusted gross income for the previous two years. If the stipend amount pushes the annuitant’s MAGI beyond the next threshold, the Part B and D premiums may be increased for the next two-years. Annuitants ages 75 and above can avoid this concern by rolling over the stipend into an IRA or qualified retirement plan.

If you have questions on how the one-time stipend may affect your taxable income, Medicare premiums, Social Security benefits, or if you should opt to rollover the stipend, contact our office. You can reach Kimberly Prowse at 361-356-8013.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.