Texas 4th Stimulus Check 2024: Is it Happening?

Texas Responds with Assistance in Absence of Federal Stimulus Checks in 2023

While the federal government has not announced a 4th federal stimulus check for 2023, following the last distribution in March 2021, the state of Texas has taken proactive steps to address the needs of its residents, particularly focusing on retirees.

This year, with the absence of a universal fourth federal stimulus check, Texas has charted its own path. Texas, like many other states, cities, and counties, has leveraged State and Local Fiscal Recovery Funds (SLFRF) from the American Rescue Plan to create targeted financial support initiatives.

Texas’ notable efforts include the passage of Senate Bill (SB) 10 and House Joint Resolution (HJR) 2 by the 88th Texas Legislature in its 2023 session. These legislative actions have led to the provision of significant financial relief for eligible retirees, beneficiaries, and alternate payees of the Teacher Retirement System (TRS).

This relief comes in two forms: one-time stipends and a one-time Cost-of-Living Adjustment (COLA), both designed to support the financial well-being of retired educators and educational staff in the state.

Texas Stimulus Checks: One-Time Stipends and COLA for TRS Retirees

In Texas, the spotlight has shifted to providing support for retirees, especially those receiving annuities from the Teacher Retirement System (TRS). The 88th Texas Legislature, during its 2023 regular session, passed two notable pieces of legislation: Senate Bill (SB) 10 and House Joint Resolution (HJR) 2.

These legislative acts are instrumental in offering significant financial relief to eligible retirees, beneficiaries, and alternate payees, through two distinct forms of benefits: one-time stipends and a one-time Cost-of-Living Adjustment (COLA).

Understanding the Two Types of Benefits

One-Time Stipends

The Texas Legislature has introduced a significant benefit for TRS annuitants in the form of one-time stipends, designed to provide immediate financial assistance to eligible retirees. Here are the key details:

Eligibility Based on Age:

• Annuitants aged 75 and older as of August 31, 2023, are eligible for a $7,500 stipend.
• Those aged 70 to 74 by the same date are eligible for a $2,400 stipend.
• This eligibility extends to surviving spouses receiving an annuity, based on the same age criteria.

Payment Schedule and Method:

• The stipends were scheduled for distribution in mid to late September 2023.
• The $7,500 stipend is rollover eligible, meaning recipients can choose to directly roll it over into another retirement plan, subject to a mandatory 20% income tax withholding if not rolled over.
• The $2,400 stipend is not eligible for a rollover, and income tax will be withheld based on the annuitant’s tax preference on file.

Inclusive Coverage:

• The stipend initiative covers all position types receiving a TRS annuity, ensuring broad coverage for a diverse group of retirees.

Cost-of-Living Adjustment (COLA)

In addition to the one-time stipends, a one-time COLA has been authorized to support the long-term financial stability of TRS retirees. The key aspects of this COLA include:

Approval and Implementation:

• The COLA was dependent on the approval of Proposition 9, a constitutional amendment, by Texas voters in November 2023.
• With its approval, the COLA will be applied to eligible annuitants’ payments beginning with their January 2024 payment.

Notification Timeline:

• TRS will begin mailing notification letters to eligible annuitants in mid-December 2023. These letters will inform annuitants of their eligibility for the COLA.
• A second letter, to be mailed prior to the January 2024 annuity payments, will detail the change in the annuity payment amount, including the new gross monthly annuity, applicable IRS withholdings, other withholdings, and the new net monthly annuity.

Permanent Increase:

• This COLA is a one-time but permanent increase to the annuity payments, helping retirees to better cope with inflation over time.

Variable Rates Based on Retirement Date:

The rate of COLA varies based on the annuitant’s retirement date:

• 2% for retirements from 9/1/2013 through 8/31/2020.
• 4% for retirements from 9/1/2001 through 8/31/2013.
• 6% for retirements on or before 8/31/2001.

Broad Eligibility:

• The COLA benefit is applicable to all eligible TRS annuitants, regardless of their position type, as long as they are receiving a TRS annuity.

By offering both one-time stipends and a COLA, the Texas Legislature is addressing both immediate and long-term financial needs of its retirees, reflecting a comprehensive approach to supporting those who have served in the educational sector.

Distinguishing Between the Stimulus Stipends and COLA

While both the stipends and COLA are targeted at providing financial relief, they serve different purposes and have distinct timelines and eligibility criteria.

The one-time stipends are immediate, lump-sum payments meant to offer a financial boost in the short term.

In contrast, the COLA is a permanent increase in the monthly annuity amount, reflecting a long-term enhancement to the financial stability of retirees. It’s crucial for TRS annuitants to understand these differences to fully appreciate the extent of benefits being provided by the state of Texas.

Impact on Social Security Benefits

One key concern for retirees is whether the Texas stimulus benefits—both the one-time stipends and COLA—will affect their Social Security benefits. It’s important to note that:

• No Direct Impact on Social Security: The one-time stipend and COLA from TRS are independent of Social Security benefits. These state-provided benefits are not expected to directly impact Social Security payments.
• Consideration for Total Income: However, retirees should consider their total income, including these benefits, when evaluating their overall financial situation. While these state benefits do not directly alter Social Security payments, total income can influence tax liabilities and eligibility for other assistance programs.

Retirees should stay informed and perhaps consult with a financial advisor to fully understand how their total income, including these new benefits, fits into their broader financial plan.