Lump-Sum Payments at Retirement

Some employers give their employees the option of taking a single payment of up to 100% of their TCDRS account balance when they retire. This is an optional benefit — you can choose to adopt it or not.

A lump-sum payment lowers a member’s monthly benefit over their lifetime. They still get the monthly benefit payment for life, but the payments will be smaller based on the amount of the lump-sum payment.

A lump-sum payment may also have serious tax consequences. We are required by the IRS to automatically withhold 20% of their payment for taxes. They may also be subject to additional tax penalties. An employee may want to specify additional withholding if they are requesting a lump-sum payment.

We encourage employees to contact TCDRS Member Services before making the decision to find out how it will affect their lifetime benefit payment.

If you are considering this as a plan option, access the Plan Customizer from your employer portal or call TCDRS Employer Services for more information. 

Yearly Plan Review