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Beneficiaries

Claims/Information

How should the death of a member be reported to TRS?

When a member dies, a certified or original death certificate must be sent to TRS. The following information about the member must also be provided: the member's name, TRS membership number, Social Security number, and date of death. The person reporting the death must also provide his/her name, address, and phone number.

For more information, please see the Guide to Death Benefits for Beneficiaries of Retired Members or the Guide to Death Benefits for Beneficiaries of Non-Retired Members .

What documentation must be submitted in order to claim a death benefit?

A member's beneficiary (or representative) must first submit a certified or original death certificate for the member; (s)he must also submit a Claimant's Statement (code DB17) . We will inform them of additional documentation and forms they may have to file.

For more information, please see the Guide to Death Benefits for Beneficiaries of Retired Members or the Guide to Death Benefits for Beneficiaries of Non-Retired Members .

Why does TRS require that original documents (instead of photocopies) be submitted for death benefit claims?

TRS requires original documents to ensure that they have not been altered.

Must any payments be returned to TRS after a member dies?

Yes. TRS must receive all Qualified Pension Plan (QPP) retirement allowance payments that were cashed or directly deposited after the member's death in order to process any benefits payable. If any QPP retirement allowance checks received by the retiree in or after the month of his/her death were not cashed, they must be returned to TRS. If the checks were cashed, deposited, or credited to the member's account through Electronic Fund Transfer (EFT), the money must be refunded by check or money order that is made payable to the "Teachers' Retirement System of the City of New York." We will inform beneficiaries of the amount due to TRS.

Why are beneficiaries required to return any retirement allowance checks the retiree received in or after the month of death?

When a retiree dies before the last day of a month, that month's check is no longer payable to the member. A fraction of the payment, representing the portion of the month the member was alive, is payable to a fractional beneficiary, whom the member designated on his/her retirement application. The remaining portion of the payment is payable as part of the regular death benefit.

If any retirement allowance payments were cashed or directly deposited after the member's death, TRS will contact his/her beneficiaries to inform them of the total amount due. TRS must receive payment in order to process any benefits payable.

How long does it take to process a death benefit payment?

If the deceased was a retiree, it takes TRS approximately four to six weeks to send a Benefit Package to all beneficiaries after we have received a certified or original death certificate and all payments that must be returned. The death benefit payment is issued approximately two months after TRS receives the correctly completed Claimant's Statement (code DB17) and other required documentation.

If the deceased was an in-service member, death benefit processing may take several months due to additional information we must receive from outside agencies.

For beneficiaries under the Tax-Deferred Annuity (TDA) Program, and beneficiaries of members who died while separated from service, TRS will generally send the Benefit Package four to six weeks after we have received a certified or original death certificate.

For more information, please see the Guide to Death Benefits for Beneficiaries of Retired Members or the Guide to Death Benefits for Beneficiaries of Non-Retired Members .

Why does it take so long to process a death benefit payment?

Processing a death benefit is a complex process. If the deceased was a retiree, all Qualified Pension Plan (QPP) payments issued after the member's death must be returned to TRS; in addition, any retroactive amounts due the estate must be calculated before the death benefit due can be determined.

If the deceased was an in-service member, TRS must verify the member's complete service and salary history, which involves obtaining information from the member's former employers. TRS must also adjust QPP account balances to reflect any loans or excess distributions. TRS must then manually calculate the benefits and generate a benefits letter, and the Office of the Actuary must certify the case.

For more information, please see the Guide to Death Benefits for Beneficiaries of Retired Members or the Guide to Death Benefits for Beneficiaries of Non-Retired Members .

When a member dies, how can someone find out what the death benefit would be and what payment option the member chose for his or her retirement allowance?

TRS will provide this information only to designated beneficiaries, a court-appointed executor, or the administrator of the estate.

What is a spousal right of election, and how could it affect the distribution of benefits after the death of a TRS member?

When a TRS member or TRS beneficiary dies, New York State law provides that his/her spouse may elect a share of the deceased spouse's net estate,^ even if the spouse was not designated as a beneficiary. The elective share is the greater of $50,000, or one-third of the net estate. If the net estate is less than $50,000, the elective share is the net estate. Benefits from TRS' Qualified Pension Plan (QPP) and Tax-Deferred Annuity (TDA) Program accounts are included in calculating the net estate.

Please note that the rules described above do not apply to divorced spouses. They also do not apply if the decedent designated the beneficiary of the TRS benefits on or before September 1, 1992 and did not subsequently change the beneficiary designation.

^The net estate, as defined by New York State statute, consists of the net probate assets, as well as testamentary substitutes.

How do I exercise a spousal right of election for TRS benefits?

If you are the spouse of a TRS member or TRS beneficiary, New York State law provides that you may elect a share of your deceased spouse's estate even if you were not named as a beneficiary. If TRS has not yet distributed the benefits payable upon the death of a member or beneficiary, we will refrain from making a death benefit payment or transfer to the designated beneficiaries upon being served with a certified copy of a court order instructing us to do so.

Generally, you must exercise a right of election within six months from the date of issuance of letters testamentary or of letters of administration, and generally must assert this right no later than two years after the date of the decedent's death. For more information, please see the What is a spousal right of election, and how could it affect the distribution of benefits after the death of a TRS member? FAQ above.

TRS strongly urges you to consult with an attorney if you are contemplating exercising a spousal right of election. TRS will be held harmless and free from any liability for making any payment or transfer to a person who would be otherwise entitled to such funds if not for the surviving spouse's exercise of a right of election. In all cases, the specific provisions of the governing laws, rules, and regulations will prevail.

Death Benefits

When a retiree dies, what benefits may be payable?

A death benefit, representing all or part of the member's retirement allowance under the Qualified Pension Plan (QPP), may be payable to a designated beneficiary or the member's estate; this would be based upon the payment option that the member chose at retirement. In addition, a fractional payment of the retirement allowance payment for the month in which the member died would be payable to a designated beneficiary, as long as the member did not die on the last day of the month.

For more information, please see the Guide to Death Benefits for Beneficiaries of Retired Members and the If the member participated in TRS' Tax-Deferred Annuity (TDA) Program, what TDA benefits may be payable? FAQ below.

What QPP benefits are payable upon the death of an in-service Tier I member?

When an in-service Tier I member dies before becoming eligible for retirement under the Qualified Pension Plan (QPP), the death benefit would equal the member's Annuity Savings Fund (ASF) balance, Increased-Take-Home-Pay (ITHP) balance, and an amount based on his/her salary and years of Total Service Credit.

The following table shows how the member's Total Service Credit affects the death benefit payable.

Years of Service Credit Amount of Death Benefit
Less than 10 One-half the member's salary in the year immediately before the date of the member's death
At least 10 but less than 20 The member's salary in the year immediately before the date of the member's death
20 or more Two times the member's salary in the year immediately before the date of the member's death

Note: The member's salary is the average annual salary in the year immediately before the date of death. It is generally not affected by any approved leaves of absence with or without pay.

If the member was eligible for a service retirement at the time of death, or died within the first 30 days after retiring, the death benefit would be the greater of the amount indicated in the first paragraph above or a benefit based on the reserves that would have been payable under Option I Modified had the member retired on the day before he or she died. (Option I Modified is a retirement payment option that provides a lump-sum benefit to the designated beneficiary based on the member's available pension reserves.)

What QPP benefits are payable upon the death of a Tier I member who was separated from service?

If a Tier I member had at least 10 years of Total Service Credit at the time of death, but was no longer in active service and was not yet eligible for a service retirement under the Qualified Pension Plan (QPP), the death benefit payable would equal the following: one half the amount of the ordinary death benefit that would have been payable had the member died on the last day that service was rendered. If the member's TRS membership had ceased during the separation from service, interest on his/her QPP account balances stopped accruing interest as of the date the membership ceased.

What QPP benefits are payable upon the death of an in-service Tier II, III, IV, or VI member?

If a Tier II, III, IV, or VI member dies while in service and is credited with at least one year of service since last joining TRS, the member's designated beneficiary can apply to receive ordinary death benefits under the Qualified Pension Plan (QPP). The death benefit would equal the balance in the member's Annuity Savings Fund (ASF) (for Tier II members) or Member Contributions Accumulations Fund (MCAF) and Annuity Savings Accumulation Fund (ASAF) (for Tier III, IV, and VI members), plus the amount of either Death Benefit #1 or Death Benefit #2.

As of October 1, 2000, beneficiaries of Tier II, III, and IV members receive the greater of either Death Benefit #1 or Death Benefit #2, even if the member had elected Death Benefit #1 coverage. Members who joined TRS after January 1, 2001 (including Tier VI members) are automatically enrolled in Death Benefit #2.

What QPP benefits are payable upon the death of a Tier II, III, IV, or VI member who was separated from service?

If a Tier II, III, IV, or VI member had at least 10 years of Total Service Credit at the time of death, but was no longer in active service and was not yet eligible for a service retirement under the Qualified Pension Plan (QPP), the amount of Death Benefit #1 or #2 would equal one half of the amount that would have been payable had the member died on the last day that service was rendered. If the member's TRS membership had ceased during the separation from service, interest on his/her QPP account balances stopped accruing interest as of that date.

What is Death Benefit #1?

Under Death Benefit #1, the benefit would equal 1/12 of the member's last 12 months' regularly earned salary multiplied by each full year of Total Service Credit—to a maximum of three times the member's annual salary; this maximum would apply to members who have 36 or more years of Total Service Credit. (This description assumes that the member was in active service and died with at least one year of Total Service Credit since last joining TRS.)

As of October 1, 2000, beneficiaries of Tier II, III, and IV members receive the greater of either Death Benefit #1 or Death Benefit #2, even if the member had elected Death Benefit #1 coverage. Members who joined TRS after January 1, 2001 (including Tier VI members) are automatically enrolled in Death Benefit #2.

What is Death Benefit #2?

Under Death Benefit #2, the benefit would equal one year's salary upon the completion of one year of service, two years' salary upon the completion of two years of service, and three years' salary upon the completion of three or more years of service. If the member remained in service to age 61, the in-service death benefit would be reduced by 5% for each succeeding year until age 70, when the benefit would equal 50% of the applicable amount. (This description assumes that the member was in active service and died with at least one year of Total Service Credit since last joining TRS.)

As of October 1, 2000, beneficiaries of Tier II, III, and IV members receive the greater of either Death Benefit #1 or Death Benefit #2, even if the member had elected Death Benefit #1 coverage. Members who joined TRS after January 1, 2001 (including Tier VI members) are automatically enrolled in Death Benefit #2.

The following table shows the age-reduction factors that affect the benefit payable under Death Benefit #2.

Age at Date of Death Percentage of Benefit Payable After Reduction
60 or under 100%
61 95%
62 90%
63 85%
64 80%
65 75%
66 70%
67 65%
68 60%
69 55%
70 50%

If the member participated in TRS' Tax-Deferred Annuity (TDA) Program, what TDA benefits may be payable?

If the member participated in the TDA Program, the member's designated TDA beneficiaries may be eligible to receive the balance of the member's TDA account or establish a TDA account with TRS.

For more information, please see the Guide to Death Benefits for Beneficiaries of Retired Members or the Guide to Death Benefits for Beneficiaries of Non-Retired Members.

Can a beneficiary roll over a death benefit to another account?

Spouses of deceased members are permitted to roll over the taxable portion of a Qualified Pension Plan (QPP) and/or Tax-Deferred Annuity (TDA) Program death benefit to an eligible Individual Retirement Arrangement (IRA) or other successor program. Non-spouse beneficiaries may roll over the taxable portion of a QPP and/or TDA death benefit to an Inherited IRA or other successor program.

Under Chapter 677 of the Laws of 2003, a beneficiary of a deceased participant in TRS' TDA Program may defer distribution of TDA funds by establishing a TDA account with TRS.

For more information about rolling over a death benefit, please consult the applicable forms, which are available under the Withdrawals/Distributions category in the Forms > Beneficiaries section.

For more information, please see the What beneficiaries are eligible to establish an account in TRS' Tax-Deferred Annuity (TDA) Program? FAQ below.

As a beneficiary, may I invest the death benefit I receive in TRS' investment programs?

Beneficiaries are not permitted to reinvest Qualified Pension Plan (QPP) death benefit funds with TRS. However, under Chapter 677 of the Laws of 2003, a beneficiary of a deceased participant in TRS' Tax-Deferred Annuity (TDA) Program may be eligible to defer distribution of TDA funds by establishing a TDA account with TRS.

For more information, please see the What beneficiaries are eligible to establish an account in TRS' Tax-Deferred Annuity (TDA) Program? FAQ below.

What beneficiaries are eligible to establish an account in TRS' Tax-Deferred Annuity (TDA) Program?

The deceased member must have been a TRS TDA Program participant with active or TDA Deferral status when (s)he died, and must not have elected to annuitize his/her TDA Program funds upon retirement. The value of the funds available to each beneficiary for establishing an account must be $5,000 or greater.

Eligible beneficiaries who elect to keep their funds with TRS must establish an account within six months of the member's date of death by filing a TDA Enrollment Form for Beneficiaries (code TD80). This election would be irrevocable; however, upon establishing a TDA account, beneficiaries may withdraw their TDA funds at any time (provided the withdrawal complies with TRS and Internal Revenue Service (IRS) rules and regulations).

TDA Account Guidelines

  • The beneficiary must be an individual (a trustee, estate, or organization named as a beneficiary is not eligible to participate). If the beneficiary is a minor, a legal guardian must be appointed to act on his/her behalf.
  • The beneficiary may not make new contributions to the account, or apply for loans from the account;
  • Funds in this account may only be invested in the Variable-Return Programs, not in the Fixed Annuity Program; and
  • The beneficiary's designated beneficiaries would not be able to establish an account with TRS and would have to make a lump-sum withdrawal of any TDA death benefit upon the original beneficiary's death.

If a member dies in active service, may the beneficiary annuitize the death benefit?

Qualified Pension Plan (QPP) beneficiaries may annuitize a QPP benefit only if the deceased was a Tier I or Tier II member and the QPP benefit is at least $10,000. Eligible beneficiaries of Tier I members must file to annuitize their death benefit by October 31 of the year following the year of the member's death; beneficiaries of Tier II members must file to annuitize their death benefit within 90 days from the date of the member's death.

All Tax-Deferred Annuity (TDA) Program beneficiaries may annuitize a TDA benefit of $10,000 or more. In all cases, before an annuity can be calculated for a beneficiary, (s)he must submit a photocopy of his/her birth certificate to TRS.

There are two ways of annuitizing a death benefit:

Option A, in which the amount would be paid in monthly installments during the beneficiary's lifetime, with all payments ceasing upon his/her death.

Option B, in which the amount of the annuity is slightly reduced, so that any remaining reserves after the beneficiary's death would be payable to a designated beneficiary or estate. Please note that any benefits due the member's estate cannot be annuitized.

Who receives the death benefit if a divorced member of TRS dies?

TRS generally makes death benefit payments in accordance with the member's most recent beneficiary designations. However, if the designated beneficiary is a former spouse through divorce, annulment, or judicial separation, the designation may be considered revoked. In accordance with Chapter 173 of the Laws of 2008, a former spouse is treated as having predeceased the member. Benefits that would have been payable to the former spouse would instead be payable to the member's estate or another beneficiary on file (if applicable).

However, there are some instances where the designation of a former spouse would not be revoked. These include irrevocable designations made by the member (such as those made under a "continuing payment" option for the retirement allowance) and requirements specified in an instrument such as a domestic relations order.

Where can I find information about what benefits are payable under a specific payment option?

Information about the specific payment option is available by accessing the Retirement Payment Options: Tiers I/II and TDA Annuitization Options brochure or the Retirement Payment Options: Tiers III/IV/VI brochure.

What is an accidental death benefit?

An accidental death benefit may be paid to beneficiaries of members of all tiers in lieu of an ordinary death benefit in the following circumstances:

  • The in-service member's death was the natural and proximate result of an accident that was sustained during the performance of duty, but was not caused by the member's willful negligence; and
  • The beneficiary (or other representative) applies for an accidental death benefit within two years of the member's death (except for beneficiaries of Tier IV and VI members, who must generally apply for an accidental death benefit within 60 days of the member's death).

Please be aware that certain legal restrictions apply to the payment of accidental death benefits and should be considered before applying for this benefit.

What is a spousal right of election, and how could it affect the distribution of benefits after the death of a TRS member?

When a TRS member or TRS beneficiary dies, New York State law provides that his/her spouse may elect a share of the deceased spouse's net estate,^ even if the spouse was not designated as a beneficiary. The elective share is the greater of $50,000, or one-third of the net estate. If the net estate is less than $50,000, the elective share is the net estate. Benefits from TRS' Qualified Pension Plan (QPP) and Tax-Deferred Annuity (TDA) Program accounts are included in calculating the net estate.

Please note that the rules described above do not apply to divorced spouses. They also do not apply if the decedent designated the beneficiary of the TRS benefits on or before September 1, 1992 and did not subsequently change the beneficiary designation.

^The net estate, as defined by New York State statute, consists of the net probate assets, as well as testamentary substitutes.

How do I exercise a spousal right of election for TRS benefits?

If you are the spouse of a TRS member or TRS beneficiary, New York State law provides that you may elect a share of your deceased spouse's estate even if you were not named as a beneficiary. If TRS has not yet distributed the benefits payable upon the death of a member or beneficiary, we will refrain from making a death benefit payment or transfer to the designated beneficiaries upon being served with a certified copy of a court order instructing us to do so.

Generally, you must exercise a right of election within six months from the date of issuance of letters testamentary or of letters of administration, and generally must assert this right no later than two years after the date of the decedent's death. For more information, please see the What is a spousal right of election, and how could it affect the distribution of benefits after the death of a TRS member? FAQ above.

TRS strongly urges you to consult with an attorney if you are contemplating exercising a spousal right of election. TRS will be held harmless and free from any liability for making any payment or transfer to a person who would be otherwise entitled to such funds if not for the surviving spouse's exercise of a right of election. In all cases, the specific provisions of the governing laws, rules, and regulations will prevail.

Legal

What is a Power of Attorney (PoA)?

A Power of Attorney (PoA) is a legal instrument that allows one or more individuals (referred to as agents or attorneys-in-fact) to act on behalf of another person (referred to as the principal). Agents can be granted the right to handle a broad range of personal, financial, legal, and other business affairs—including retirement benefits.

Please note the following:

  • By using a PoA, you are able to decide in advance whom you want to act for you in situations in which you are unable to make decisions for yourself. However, you do not lose your authority to act even though you have given your agent similar authority.
  • A durable PoA allows the agent to act for you even after you are legally incapacitated (i.e., when you lack sufficient understanding to make rational decisions or engage in responsible actions due to mental or physical disability or illness). A durable PoA may be used immediately and is effective until revoked by you, or until your death.
  • If you don't have a durable PoA in place and you become incapacitated, your affairs may need to be managed by a court-appointed guardian under a process that can be complex and expensive.
  • Once you appoint an agent under a PoA, that person may act on your behalf without telling you. When choosing an agent, you should select someone you trust who will act in your best interest.

TRS strongly recommends that you consult an attorney before executing a Power of Attorney.

How can I execute a Power of Attorney (PoA) granting an agent the authority to make decisions on my behalf regarding my TRS benefits?

If you are a TRS member wishing to execute a PoA granting another person(s) the authority to make decisions regarding your current and future TRS retirement benefits, you may either:

Complete and submit a TRS Special Durable Power of Attorney (code BK75) . This non-statutory form is for use by TRS members and is specifically limited to TRS retirement benefit transactions and does not authorize an agent to act in a transaction that is not related to TRS. Please note that TRS makes this form available merely as a convenience and assumes no responsibility with regard to your use of it.

If you execute a TRS Special Durable Power of Attorney form without placing any limitations in the form's Section (g): MODIFICATIONS, you are authorizing the agent to conduct ANY transaction that you would be authorized to do (discuss retirement benefits, request access to personal information, change depository account information, etc.) with these two exceptions: 1) The agent may not name himself or herself the beneficiary of your retirement benefits, or 2) designate or change your current beneficiary.

If you want a person to be able to name himself/herself as the beneficiary, or designate or change your current beneficiary as the holder of your PoA, you must specifically include this information in Section (g): MODIFICATIONS of the TRS Special Durable Power of Attorney form.

OR

Complete and submit a statutory short form PoA provided under the New York General Obligations Law. In order for an agent to have the power to make gifts and other transfers, including the authority to designate or change beneficiaries on retirement benefit plans, both a statutory short form PoA and a statutory gifts rider must be executed simultaneously and submitted to TRS. You may instead file a valid PoA document that was executed in another state, which grants your attorney-in-fact the ability to change your beneficiary designations in accordance with that state's applicable law.

TRS strongly urges you to consult with an attorney before you execute a PoA to address any specific legal questions concerning this information. In all cases, the specific provisions of the governing laws, rules, and regulations will prevail.

Can my Power of Attorney (PoA) agent change my beneficiary designations?

If you execute a TRS Special Durable Power of Attorney (code BK75) form without modifying the form's default grant of authority to agents, your agent would not be able to change your current beneficiary designations. However, you can specifically provide on this form that your agent is able designate or change your current beneficiary designations, or to name himself/herself as the beneficiary.

If you execute a statutory short-form PoA, your agent may not change your beneficiary designations or designate himself/herself as the beneficiary unless the form contains a paragraph granting gift-giving authority you initialed AND the PoA is accompanied by a valid statutory gifts rider, which was created simultaneously with the PoA. The rider must be executed pursuant to the requirements of General Obligations Law Section 5-1514, which includes it being acknowledged and witnessed by two witnesses.

A short-form PoA, properly executed in accordance with the law in effect prior to September 1, 2009, remains valid and will be honored by TRS.

For additional important information, we encourage you to read the TRS Special Durable Power of Attorney form.

How can I revoke my Power of Attorney (PoA)?

You may revoke your PoA at any time by sending us a signed, notarized statement.

Although a durable PoA is revocable before someone becomes incapacitated, if TRS is not notified when a PoA is revoked, TRS generally will be entitled to rely on its good-faith belief as to the PoA's continued validity.

If I have Power of Attorney (PoA) for a retiree, how may I obtain a copy of the retiree's 1099 Form?

If TRS has a copy of your PoA on file, you may submit a written request to TRS for a copy of the retiree's 1099 Form. You may also submit a written, notarized authorization from the retiree if you wish to have this information released to you.

What is a spousal right of election, and how could it affect the distribution of benefits after the death of a TRS member?

When a TRS member or TRS beneficiary dies, New York State law provides that his/her spouse may elect a share of the deceased spouse's net estate,^ even if the spouse was not designated as a beneficiary. The elective share is the greater of $50,000, or one-third of the net estate. If the net estate is less than $50,000, the elective share is the net estate. Benefits from TRS' Qualified Pension Plan (QPP) and Tax-Deferred Annuity (TDA) Program accounts are included in calculating the net estate.

Please note that the rules described above do not apply to divorced spouses. They also do not apply if the decedent designated the beneficiary of the TRS benefits on or before September 1, 1992 and did not subsequently change the beneficiary designation.

^The net estate, as defined by New York State statute, consists of the net probate assets, as well as testamentary substitutes.

How do I exercise a spousal right of election for TRS benefits?

If you are the spouse of a TRS member or TRS beneficiary, New York State law provides that you may elect a share of your deceased spouse's estate even if you were not named as a beneficiary. If TRS has not yet distributed the benefits payable upon the death of a member or beneficiary, we will refrain from making a death benefit payment or transfer to the designated beneficiaries upon being served with a certified copy of a court order instructing us to do so.

Generally, you must exercise a right of election within six months from the date of issuance of letters testamentary or of letters of administration, and generally must assert this right no later than two years after the date of the decedent's death. For more information, please see the What is a spousal right of election, and how could it affect the distribution of benefits after the death of a TRS member? FAQ above.

TRS strongly urges you to consult with an attorney if you are contemplating exercising a spousal right of election. TRS will be held harmless and free from any liability for making any payment or transfer to a person who would be otherwise entitled to such funds if not for the surviving spouse's exercise of a right of election. In all cases, the specific provisions of the governing laws, rules, and regulations will prevail.

Payments

How can beneficiaries initiate Electronic Fund Transfer (EFT)?

Beneficiaries who are receiving monthly continuing payments of a member's retirement allowance should complete an EFT Authorization Form (code BK58) to enroll in EFT. The completed form, along with the required documentation, must be returned to TRS.

For more information, please see the Electronic Fund Transfer brochure.

What are the tax consequences of receiving death benefits?

Lump-sum Qualified Pension Plan (QPP) death benefit payments are federally taxed in the year that they are received (except for any portion attributable to after-tax member contributions). They are not subject to New York State or New York City taxes; however, beneficiaries residing in a state other than New York should check with their state tax agency about the tax consequences of these payments.

QPP benefits distributed to beneficiaries as an annuity are subject to federal income taxes. They are not subject to New York State and New York City taxes; however, beneficiaries residing in a state other than New York should check with their state tax agency about the tax consequences of these payments.

Tax-Deferred Annuity (TDA) Program benefits paid in a lump sum and payments distributed as an annuity generally are federally taxable and may be subject to state and local taxes.

How is interest calculated on death benefit payments?

Where interest applies, the interest rate used for death benefit payments is the lesser of the following: a) the actual net rate of return on TRS' Qualified Pension Plan (QPP) assets for a corresponding period, based on reported quarterly investment returns; or b) the scheduled rate of 5% simple interest for the first year following the member's death, 4% for the second year, 3% for the third year, 2% for the fourth year, 1% for the fifth year, and no interest for the sixth year following the member's death and thereafter. If the applicable net rate of investment return on TRS' QPP assets is zero or negative, no interest would be applied to the death benefit payment; however, the benefit itself would not be reduced.

Please note that TRS determines the interest amount only after the benefit is claimed; we cannot determine the interest amount in advance because actual investment returns are a factor in the calculation.

For more information, please see the When does interest on death benefit payments begin? FAQ below.

When does interest on death benefit payments begin?

That depends on what type of benefit you are receiving:

For a lump-sum death benefit—Interest begins as of the 31st day after the date of death and continues until the earliest of the following dates: a) the date the benefit payment is issued; or b) five years after the date of death; or c) six months after the date that TRS sends claim forms and/or notification of this policy by letter to the beneficiaries.

For death benefit payments under a continuing payment option—The benefit payable to the beneficiary is monthly payments for life equaling a percentage of the member's retirement allowance. In this case, interest begins from the date of death of the member and continues until the earlier of the following dates: a) one calendar month prior to the date the initial payment is paid; or b) six months after the date that TRS sends claim forms and/or initial notification of this policy by letter to the beneficiary.

For more information, please see the How is interest calculated on death benefit payments? FAQ above.

Are taxes withheld from a death benefit?

The IRS requires that TRS withhold 20% of the taxable portion of any lump-sum death benefit paid to a surviving spouse, unless the spouse instructs TRS to directly roll over the amount into an IRA or a Section 401 Plan. In addition, the IRS requires that TRS withhold 10% of any death benefit paid to a non-spouse beneficiary, unless that beneficiary elects to have a percentage greater than 10% withheld. Any withheld amount will be sent to the IRS as credit toward the beneficiary's federal taxes for the year of distribution.

For more information about taxes and death benefit payments, please consult the applicable forms, which are available under the Withdrawals/Distributions category in the Forms > Beneficiaries section.