Under the Internal Revenue Code (IRC), TDA or Roth participants who are under age 59½ may withdraw their contributions if they have a sudden and heavy financial need that they are unable to reasonably meet through other financial resources. If you meet those requirements, you may request a hardship withdrawal.

Before requesting a hardship withdrawal, you must maximize all other available non-TRS resources. Examples of non-TRS resources are:

• Any available loans from the City of New York Deferred Compensation Plan (DCP);
• Any available loans against home equity and/or life insurance policies;
• Any commercial loans available on reasonable terms;
• Any available reimbursement or compensation from insurance and/or other sources; and
• Any reasonably available assets that can be liquidated without causing a sudden financial need.

(Hardship withdrawal applications based on domestic abuse are exempt from this requirement.)

If you are approved for a hardship withdrawal, please note the following:

• TRS would calculate your hardship withdrawal amount based on the supporting documentation you submitted and funds in your TDA or Roth account available for hardship withdrawal. (Therefore, the amount of funds you are eligible to withdraw under the IRC hardship provisions may differ from the amount you request on your hardship withdrawal application.)
• Your hardship withdrawal would be issued on the next available TRS payroll after the application is approved.
• The withdrawal would be made from your balance in the Fixed Return Fund until depleted and then proportionally from your balances in the variable-return Passport Funds. The unit values used to value your withdrawal from the variable-return Passport Funds in dollars would be the unit values in effect for the month following the month in which TRS receives this application.
• Amounts distributed through a hardship withdrawal are not eligible to be rolled over or transferred. Therefore, your withdrawal would be subject to federal income tax; state and local taxes may also apply.

Hardship withdrawals are paid by Electronic Fund Transfer (EFT) directly into your bank account. TRS will issue payment via paper checks only for members residing abroad whose bank will not accept ACH/EFT deposits. You may provide or update bank account information in the secure section of TRS’ website, under Payments. Please note that establishing or changing an EFT account generally takes at least 21 days.

General Provisions

• You are responsible for the accuracy of your hardship claim. If your hardship withdrawal request is approved, you would also be responsible for paying any income taxes or penalty taxes that are due as a result of this withdrawal.
• TRS suggests that you consult with your tax advisor should you have any specific tax questions.

Taxability

You can elect to have 10% withheld from the taxable portion of your withdrawal and applied to your federal taxes for the year of distribution, or choose no withholding. Under both options, you are liable for any income tax that may be due on your hardship withdrawal, and you may be subject to tax penalties if your payments of estimated tax and withholding are not sufficient under the IRC.

Your hardship withdrawal, if approved, would be a taxable distribution and would be reported to the Internal Revenue Service (IRS) in January following the calendar year in which it is distributed. For Roth hardship withdrawals, federal tax withholding applies only to the taxable portion of the withdrawal.

• Qualified withdrawals are not subject to any taxes or penalties. The IRS requires both of the following conditions to be met in a qualified withdrawal:
  1. Your Roth account must be open for at least five years. The five-year period begins on January 1 of the tax year in which you made your first Roth contribution; your five-year information is displayed on the screen.
  2. You must be at least 59½ at the time of distribution; or the withdrawal is in conjunction with your disability retirement; or the distribution is a death benefit payment to your beneficiary.
• Non-qualified withdrawals are any Roth withdrawals that do not meet both conditions above. The portion of your withdrawal that represents investment earnings will be subject to taxes (as well as a 10% early distribution penalty if you are not yet 59½).

Amounts distributed through a TDA and Roth hardship withdrawal are not eligible to be rolled over or transferred. Therefore, your withdrawal would be subject to federal income tax; state and local taxes may also apply.

If a TDA loan is deemed a distribution in the same tax year in which you receive a TDA hardship withdrawal, the IRS would require TRS to withhold 20% of the taxable portion of the deemed distribution from the hardship withdrawal; this withholding would apply if your loan balance is deemed a distribution before your hardship withdrawal is processed, and would be in addition to any withholding required separately for the hardship withdrawal. The total amount withheld would be forwarded to the IRS and credited toward your taxes for the current year.

If you elect to have a withholding amount applied to your hardship withdrawal, the withholding amount would be adjusted based on the payment amount you receive. As a result, the estimated amounts indicated may not match the actual amounts of your hardship withdrawal.

See the FAQs on the TRS website for more information on the tax consequences of Roth and TDA withdrawals.

This is where you will select a hardship withdrawal type and the withdrawal amount. You must indicate the specific dollar amount you want to withdraw from the total balance of your TDA or Roth Program account; 100% of the distribution must be paid directly to you. The maximum amount you can withdraw is noted on the screen.

On this screen you will notice a Roth Start Date and Roth Anniversary Date. These are the dates used to determine one of the factors for a “qualified” withdrawal (see Taxability below for more information). You can determine the qualified withdrawal date by starting at January 1 of the year in which you make your first Roth contribution. Here’s an example of how this rule is calculated:

In addition, you must select whether to have 10% withholding from the taxable portion applied to your hardship withdrawal for crediting toward your federal income tax for the year in which you receive your hardship withdrawal. TRS would add a dollar amount equaling the 10% withholding to the total dollar amount that you receive as a hardship withdrawal, provided you have additional funds available for hardship withdrawal. As a result, the estimated amounts indicated may not match the actual amounts of your hardship withdrawal. See Taxability above for more information on the tax consequences of Roth and TDA hardship withdrawals.

Your EFT/bank information on file with TRS is displayed on this screen.

This is where you will provide a thorough and specific description (up to 1,000 characters) of the sudden and heavy financial need that caused you to file this application. Please do not include any special characters in your description (e.g., <,>, !, @, #, %, ^, &, *, +).

In addition, you must complete the questionnaire, answering each question, even if you are not eligible for the resource listed. (The description and questionnaire are not required for withdrawals based on domestic abuse.) Note: If you have not maximized your available resources, do not file this application; you should instead apply for those resources.

If you are filing an application based on domestic abuse, you are required to read and verify that you satisfy the IRS requirements for a domestic abuse hardship withdrawal.

This page provides a summary of your hardship withdrawal. Please review the details to make sure your elections are as you intended. If you are not satisfied with your elections, click “Previous” to change your elections.

Unless you elected domestic abuse as the withdrawal type, you must provide supporting documents, either by uploading them through this website or by mailing them. Clicking on “Submit” will take you to the screen where you can upload required documents.

If you mail your documents, click on “Hardship Withdrawal Documentation Cover Sheet,” print the cover sheet, complete it, and mail it to TRS along with your documents. The cover sheet will enable us to process your supporting documents more effectively. Your application cannot be reviewed until all supporting documents are submitted. You must submit any required documentation to TRS within 10 days of your online submission. If the required documents are not received within 10 days, your hardship application will be canceled and you must file a new application.

If you are satisfied with your elections, carefully read and accept the Terms & Conditions and then click “Submit.” You will receive an email confirming your submission and notified in writing of TRS’ decision.

Cancelation and withdrawals summary

The main Withdrawal screen displays a table of current and past withdrawal requests. The Current tab displays recent requests, which can be viewed or canceled, and the status of recent submissions. After a withdrawal is paid, it is moved to Withdrawal History. Requests that have not progressed to the initial payment stage can be canceled from the main screen, but once the payment process has begun a request to cancel must be reviewed by TRS to determine if the cancel can be executed. If TRS determines that the cancelation can be done, the request will be removed from the Current section. An email confirming the cancelation request will be sent to your email address.

More information on TDA and Roth withdrawals is on the TRS website.

The types of expenses that qualify for a hardship withdrawal and the supporting documentation required are listed below. If the documentation describes a hardship for a person other than yourself, you must also include proof of the other person’s relationship to you (e.g., a 1040 form). Documentation is not required for hardship withdrawals based on domestic abuse.

• Certain medical expenses for you, your spouse, a dependent, or child (including a child who does not qualify as a dependent for tax purposes) that are not covered by health insurance. Documentation: Physician, hospital, and/or related bills.
• Tuition, related educational fees, and related room and/or board expenses for post-secondary education for either the preceding 12 months or the next 12 months of education for you, your spouse, a dependent, or child (including a child who does not qualify as a dependent for tax purposes). Documentation: Outstanding itemized bill(s) (with name of student indicated) from the academic institution.
• Payment to prevent eviction from your principal residence or foreclosure on that residence. Documentation: Valid eviction or foreclosure notice (e.g., letter from landlord, attorney, or representative indicating amount due and date of pending eviction or foreclosure).
• Costs directly related to the purchase of your principal residence (excluding mortgage payments) and additional costs (e.g., legal and/or other closing fees) associated with this purchase. Documentation: Valid sales contract for purchase of principal residence and “good faith estimate” of any additional costs.
• Payment required for a new rental lease for your principal residence following eviction from a previous principal residence. Documentation: New valid lease and eviction notice.
• Payments for burial or funeral expenses for your spouse, parent, dependent, or child (including a child who does not qualify as a dependent for tax purposes). Documentation: Funeral home, cemetery, or related bills.

• Expenses for the repair of damage to your principal residence that would qualify for the casualty deduction under Section 165 of the IRC. Documentation: Photograph(s) of damage and licensed contractor’s estimate or bill(s) to repair the damage, and/or letter from insurance company indicating the reimbursed expenses.