TEACHER RETIREMENT SYSTEM of TEXAS
REQUESTING a
REFUND
Knowing When the
Time is Right
September 2019
Our Mission
Improving the
retirement security
of our members by
prudently investing
and managing the
trust assets and
delivering benets
that make a positive
difference in their lives.
Our Vision
Earning your trust
every day.
TEACHER RETIREMENT SYSTEM of TEXAS
Eligibility ...................................................................................................................................1
Options to Consider ..................................................................................................................1
Federal Income Tax Implications ...............................................................................................2
Tax Statements Sent by TRS .....................................................................................................2
Payment Methods .....................................................................................................................3
Returning to TRS Membership After a Refund ...........................................................................3
Steps to a Refund .....................................................................................................................4
Time Frame for Receiving a Refund ..........................................................................................5
Frequently Asked Questions ......................................................................................................6
Additional Information ...............................................................................................................8
REQUESTING a REFUND
ELIGIBILITY
As a TRS member, if you terminate all employment with your TRS-covered employer(s) and have not applied for
or received a promise of employment with a TRS-covered employer, you may terminate membership in TRS and
withdraw all of the accumulated contributions in your member account. Refunding your account terminates your
service credit and waives your right to receive TRS benets unless you later reinstate your membership with TRS.
Partial refunds are not allowed. You must refund the full amount of your accumulated contributions, minus any
required withholding for federal income tax. State and employer contributions are not part of your accumulated
contributions and are not refundable.
OPTIONS to CONSIDER
Refunding your accumulated contributions may impact you in a number of ways. If you return to membership with
TRS after refunding your account, you may be subject to different retirement eligibility criteria and early-age
retirement reductions. Therefore, it’s important to consider all options available to you if you do not withdraw your
accumulated contributions before making a decision. These options include:
REQUESTING a REFUND
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You may leave your accumulated contributions
with TRS and earn interest at a rate of 2 percent
per year for up to ve school years while
absent from TRS-covered employment. Your
TRS membership will be terminated after ve
consecutive school years without earning TRS
service credit, even if you have not refunded your
account, unless you qualify for an exception or
begin work for a TRS-covered employer. If your
membership is terminated, your service credit will
be canceled and your accumulated contributions
will no longer accrue interest.
You may leave your accumulated contributions with
TRS and earn interest at a rate of 2 percent per
year. When you meet necessary age requirements
for retirement, you may apply to retire as a TRS
member and receive a monthly benet.
IF YOU HAVE AT LEAST FIVE YEARS OF
TRS SERVICE CREDIT
IF YOU HAVE LESS THAN FIVE YEARS OF
TRS SERVICE CREDIT
FEDERAL INCOME TAX IMPLICATIONS
The amount of tax withheld from your refund will depend on your age and whether you elect to rollover your refund
to another retirement plan. TRS will send a Refund Rollover Election form (TRS 6A) that gives you an opportunity to
make a rollover election for your refund.
Refunded amounts that represent pretax contributions are subject to a mandatory 20 percent federal income tax
withholding unless you roll over all eligible amounts to another eligible qualied plan or to a traditional Individual
Retirement Account (IRA). A 10 percent additional income tax on early distributions may be required by the Internal
Revenue Service (IRS) if you are under age 59½.
If you elect to roll over the entire amount of your refund to a traditional IRA or an eligible employer plan, you will not
pay tax at the time of the refund.
If you elect to roll over any eligible amounts of your refund to a Roth IRA, any portion representing pretax contributions
that is rolled over is taxable. As indicated in the Special Tax Notice Regarding Rollover Options under TRS, the 10
percent early withdrawal penalty will not apply if you are under age 59½ at the time of the rollover to a Roth IRA.
If you are not a U.S. citizen or a resident alien, TRS is required to withhold 30 percent for federal income tax unless
you qualify for and properly claim benets under a U.S. tax treaty. If eligible, you must notify TRS of your eligibility for
reduced withholding or exemption from withholding and provide a completed W8BEN form. The W8BEN can be found
on the IRS website. TRS will review your W8BEN form to determine if you are eligible for a reduced rate of withholding.
For more information on amounts in your TRS account that are eligible for rollover and types of retirement plans
eligible to receive rolled over amounts, see the Special Tax Notice Regarding Rollover Options under TRS attached to
the Application for Refund form (TRS 6).
It is your responsibility to submit the proper tax reports to the IRS and to pay any additional taxes or penalties.
Contact your tax consultant for specic advice on how requesting a refund may affect your taxes.
TAX STATEMENTS SENT by TRS
Tax statements (Form 1099-R) are required to be mailed to your address on le with TRS by Jan. 31 of the year
following a refund. Form 1099-R includes the total lump-sum distribution, any taxable income for the year paid and
the amount of income tax withheld. This information is also provided to the IRS, as required by federal law.
If you elect to roll over all or part of your refund, you will receive a separate Form 1099-R reporting the rollover
amount. Tax statements are mailed to the same address, so you must notify TRS in writing if your address changes.
TRS must receive your notication before Dec. 10 of the year in which you received your refund. This ensures that
the form will be sent to the correct address.
If you are not a U.S. citizen or resident alien, TRS will issue a Form 1042-S for your refund. This information is also
provided to the IRS, as required by federal law.
REQUESTING a REFUND
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PAYMENT METHODS
Refund payments not rolled over can be issued as a direct deposit or check. To speed up the process and help
ensure security, TRS recommends electing direct deposit.
All rollover payments will be issued as a check and will be mailed to you at the address listed on your Application for
Refund form (TRS 6).
In some cases, TRS will issue your refund payment as a check even when you select direct deposit. This may
happen if the direct deposit information is not fully complete, or if you select a bank that is located outside of
the U.S. In addition, if you select direct deposit to a U.S. bank and indicate that 100 percent of the refund will be
transferred out of the U.S., you will not be able to receive your refund through direct deposit. In this case, TRS will
issue your refund payment as a check.
RETURNING to TRS MEMBERSHIP AFTER a REFUND
If you return to TRS membership after refunding your account, you may reinstate the service credit ended by your
withdrawal. To reinstate withdrawn service credit, you must redeposit the eligible amount (determined by TRS)
plus pay applicable reinstatement fees. The cost to reinstate service credit increases each year after Aug. 31.
This amount may be paid in a lump-sum payment or in monthly installments. If you pay by monthly installments,
additional administrative fees are also assessed. If you do not reinstate your withdrawn service, that service will not
be considered in calculating your future benets.
REQUESTING a REFUND
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STEPS to a REFUND
REQUESTING a REFUND
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Obtain the Application for Refund form (TRS 6) and Special Tax Notice Regarding Rollover Options under
TRS from the TRS website or by calling the TRS Automated Telephone System at 1-800-223-8778.
STEP 1
Read and complete the Application for Refund form (TRS 6), sign the form, and have it notarized. This
certies that you have terminated all employment with your TRS-covered employer(s) and have not
applied for or received any promise of employment with another. If your name on the form is different than
TRS records, you must send TRS a social security card or a copy of the court order or marriage license
documenting your name change. If your agent under a power of attorney signs the request on your behalf,
a copy of the power of attorney must be submitted to TRS for review before the refund may be processed.
STEP 2
Send the completed application and any required documentation to:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
STEP 3
TRS may contact your previous employer(s) to conrm your date(s) of termination and nal monthly
contributions. Your employer(s) will submit a monthly payroll report, which contains your nal salary
and deposit to TRS, after the end of the calendar month in which your employer(s) made its nal
payment(s) to you.
STEP 4
If you would like to roll over all or part of your refund, TRS will send you a Refund Rollover Election
form (TRS 6A). Also refer to the Special Tax Notice Regarding Rollover Options under TRS attached to the
Application for Refund form (TRS 6). You must complete and sign the Refund Rollover Election form
(TRS 6A), indicating the amount you wish to roll over. The representative of the retirement plan receiving
your rollover must also sign the form to certify that the plan is eligible to receive the rollover of funds.
STEP 5
After we receive all required documents and your account has been reconciled with the last deposits
from your employer(s), TRS will issue you a refund payment. The payment will not be processed if
records show that you have been re-employed by a TRS-covered employer. Your payment may also
be held for other reasons such as owing money to the state for delinquent child support or for owing
money on federal or state taxes.
STEP 6
Completed applications
may also be faxed to
512-542-6597.
TIME FRAME for RECEIVING a REFUND
Generally, a refund payment will be issued within 60 days after all required documents have been received and your
employer’s monthly payroll report has been processed by TRS. The process can take up to 90 days depending
upon your last date(s) of employment.
There are other circumstances that may delay the processing of a refund. For example, if the name of the account
holder on TRS records does not match the name used on the Application for Refund form (TRS 6), the refund will be
delayed until TRS receives acceptable proof and conrmation of the name change. Also, if the TRS 6 is submitted by
an agent under a power of attorney, a copy of the power of attorney will be requested and reviewed by TRS to verify
the authority of the agent.
For a complete statement of the laws and administrative rules that pertain to the withdrawal of member
contributions, consult Chapters 822 through 825, Texas Government Code and Chapter 27, Title 34, Texas
Administrative Code. These statutes and rules are available via the TRS website (www.trs.texas.gov).
REQUESTING a REFUND
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• Qualied domestic relations order relating to a divorce between you and your former spouse,
• Temporary restraining order (TRO) that prohibits the member from removing any funds from TRS,
• Child support order that orders a portion of the benets paid on behalf of a child,
• Child support lien that prohibits distribution of any portion of the TRS account to the member,
• IRS fee for federal taxes owed by you or your spouse,
• IRS lien, or
• Writ of garnishment for criminal restitution involving you or your spouse
Additional time should also be allowed for processing a refund if any of the following are received by TRS:
REQUESTING a REFUND
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FAQs continued on next page >
FREQUENTLY ASKED QUESTIONS
All of your member contributions submitted to TRS by your TRS-covered employer(s), any voluntary
contributions you have made to purchase service credit and any interest credited to the account
are refunded. Together, these amounts are known as your “accumulated contributions.” State
and employer contributions are not part of your member account and are not refundable. State
and employer contributions remain in the TRS Pension Fund. Also, fees that you paid to purchase
or reinstate service credit and amounts you were required to contribute to TRS-Care are not
maintained in your member account and are not refundable.
Interest on your accumulated contributions is credited through the end of the month before your
TRS membership is terminated. This is generally the date that TRS requests the refund payment.
For more information regarding the calculation and crediting of interest on your TRS account,
please see the response to question 6 on page 7.
When TRS refunds contributions in my member account,
what specically is refunded?
4
Complete and submit an Application for Refund form (TRS 6) to TRS. Your member account will
be refunded after TRS receives all completed forms and your employer’s monthly report. Your TRS
membership will then be terminated and a refund issued to you.
How can I initiate the process of requesting a refund?
3
If you meet all requirements in order to withdraw your account, you may apply for a refund at any time.
When may I apply for a refund?
2
If you have terminated all employment with your TRS-covered employer(s) and have neither applied
for or received a promise of employment with another TRS-covered employer, you are eligible to
request and receive a refund of your accumulated contributions.
How can I qualify to receive a refund of my TRS member
contributions?
1
REQUESTING a REFUND
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FREQUENTLY ASKED QUESTIONS (continued)
No. You must reinstate all canceled service credit by depositing with TRS the amount of the withdrawn
accumulated contributions plus a reinstatement fee of eight percent, compounded annually, of the
amount withdrawn or refunded from the date of withdrawal or refund to the date of redeposit.
Can I reinstate only some of the years of service credit
that were canceled when I withdrew my account?
8
No. You may only withdraw all accumulated contributions in your account.
Can I withdraw only a portion of my TRS account?
7
TRS calculates current-year interest on the average balance in the terminating member’s
account from Sept. 1 of that scal year through the last day of the month before the month that
membership is terminated. The average is based on the member’s lowest and highest balances.
How is current-year interest calculated on a withdrawn
account?
6
Usually, a refund can be issued to you within 60 days after all required documents and your nal
deposit are received by TRS. If you wish to roll over all or a part of your refund, you will need to complete
the rst page of the Refund Rollover Election form (TRS 6A) and send it to the retirement plan that will
receive your rollover. Then, the receiving plan must complete the form and return it to TRS. The entire
process may take up to 90 days, depending on your last date of TRS-covered employment.
How long does it take for me to receive a refund of my
accumulated contributions after submitting form TRS 6?
5
REQUESTING a REFUND
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ADDITIONAL INFORMATION
TRS Website:
www.trs.texas.gov
TRS Mailing Address:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
TRS Telephone Counseling Center:
1-800-223-8778
Monday – Friday, 7 a.m. – 6 p.m. Automated information is available day or night, seven days a week.
TRS Benet Services Fax Number:
512-542-6597
Please remember to include your name and Participant ID or social security number on all
correspondence mailed to TRS.
Follow Us On:
i
1-800-223-8778
www.trs.texas.gov
1000 Red River Street
Austin, Texas 78701-2698
