Texas SB 10, the TRS retiree COLA law passed in 2023, gave eligible Teacher Retirement System annuitants a permanent monthly pension increase of 2%, 4%, or 6% starting in January 2024, along with a one-time stipend of $2,400 or $7,500 for the oldest retirees. The size of the raise depends on when you retired, and the stipend depends on your age as of August 31, 2023.
Who Qualifies for the Permanent Raise
Your retirement date has to be on or before August 31, 2020. For survivor beneficiaries, the member’s date of death must fall on or before that same day. Anyone who started drawing a TRS annuity after August 31, 2020 does not receive the SB 10 COLA.1Teacher Retirement System of Texas. SB 10 COLA Amounts
Eligibility covers service retirees, disability retirees, survivor beneficiaries receiving monthly payments based on a deceased member’s service, and alternate payees under a qualified domestic relations order (provided the election to receive payments was made before the cutoff). Retirees whose benefits had been forfeited under the return-to-work rules in Texas Government Code Section 824.601 still qualify; the statute specifically disregards that forfeiture when determining who gets the adjustment.2State of Texas. Texas Government Code 824-702 – Cost-of-Living Adjustment
How Much Your Monthly Increase Is
SB 10 pays larger percentages to those who have been retired longest. Three tiers:
- 6% increase if your retirement date is on or before August 31, 2001.
- 4% increase if your retirement date falls between September 1, 2001 and August 31, 2013.
- 2% increase if your retirement date falls between September 1, 2013 and August 31, 2020.
The percentage is applied to the gross monthly annuity you were already receiving, and it’s a permanent addition rather than a one-time bonus.1Teacher Retirement System of Texas. SB 10 COLA Amounts A $2,000 monthly annuity in the 4% tier becomes $2,080 going forward, every month.3Teacher Retirement System of Texas. 2023 TRS Retiree Benefit Enhancements
The One-Time Stipend
Separate from the monthly raise, SB 10 authorized a lump-sum payment for older annuitants. The amount depends on your age as of August 31, 2023:
- $7,500 if you were 75 or older.
- $2,400 if you were between 70 and 74.
You had to be eligible to receive a TRS annuity in August 2023 and to have reached the qualifying age on or before August 31, 2023.4Teacher Retirement System of Texas. FAQs – One-Time Stipends The stipend does not change your monthly annuity; it’s a one-time payment on top of everything else.
Taxes and Withholding
Texas has no state income tax, but the IRS treats every TRS distribution as taxable pension income, and the two stipends are handled differently in a way that surprises people.
The $7,500 stipend is rollover-eligible. If you don’t roll it into an IRA or another qualified plan, TRS applies mandatory 20% federal withholding, so the check lands as $6,000 unless you actively elect a rollover.4Teacher Retirement System of Texas. FAQs – One-Time Stipends
The $2,400 stipend is not rollover-eligible. Withholding on it follows whatever Form W-4P you have on file with TRS, or a default rate if you never submitted one. Both stipends and the ongoing COLA increases appear on your annual Form 1099-R.4Teacher Retirement System of Texas. FAQs – One-Time Stipends
When the Money Arrived and How to Confirm It
TRS processed the one-time stipends in fall 2023 after Proposition 9 election results were certified. The permanent monthly COLA first appeared on the January 2024 annuity payment, which TRS paid on January 31, 2024.3Teacher Retirement System of Texas. 2023 TRS Retiree Benefit Enhancements
No paperwork was required. TRS applied the adjustment automatically, and direct-deposit recipients saw the new amount arrive in the same bank account. To verify your specific increase or review payment history, log into the TRS online member portal, which shows a breakdown of the gross annuity including the COLA.5Teacher Retirement System of Texas. TRS to Issue COLA to Eligible Annuitants
A Second COLA Starts in 2028
SB 10 also set up a separate gain-sharing COLA scheduled to begin in September 2028. In years when the system’s average investment return over the previous five years meets a specified threshold, TRS must provide an additional annual cost-of-living adjustment, capped at 2%. If investment performance falls short, no adjustment is paid that year.6Texas Legislature Online. 88(R) SB 10 – Committee Report (Substituted) Version – Bill Analysis
Eligibility for the gain-sharing COLA is narrower than for the January 2024 raise. Texas Government Code Section 824.702 limits it to annuitants whose retirement date (or member’s date of death, for survivor beneficiaries) was on or before August 31, 2004. If you retired between 2004 and 2020, you received the one-time COLA but you’re not in the group scheduled for the 2028 gain-sharing adjustment.2State of Texas. Texas Government Code 824-702 – Cost-of-Living Adjustment
Social Security Changes for TRS Retirees
Many TRS retirees who also earned Social Security through other employment used to see those benefits cut by the Windfall Elimination Provision or the Government Pension Offset. WEP reduced a retiree’s own Social Security benefit; GPO reduced spousal or survivor benefits, sometimes down to zero.
The Social Security Fairness Act, signed into law on January 5, 2025, repealed both provisions. TRS retirees previously affected by either no longer face the reduction.7Teacher Retirement System of Texas. Social Security and TRS
If you’re currently drawing a reduced Social Security benefit, you generally don’t need to take any action. The Social Security Administration is adjusting benefits automatically. If you never applied for Social Security because you believed WEP or GPO would eliminate your benefit entirely, file an application now; you may be entitled to payments you previously thought were unavailable.