Under the Internal Revenue Code (IRC), Tax-Deferred Annuity (TDA) Program participants who are under age 59½ may withdraw their TDA 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.)

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.

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 account available for hardship withdrawal. (Therefore, the amount of TDA 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 TDA 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 the following exceptions:

• Members applying for hardship withdrawal based on domestic abuse have the option to receive payment by check;
• Members residing abroad whose bank will not accept ACH/EFT deposits.

Bank information for in-service members paid on the Department of Education payroll is already on file; no action is required. If your bank information is not on file with TRS and the two exceptions noted above do not apply to you, you must submit an online Electronic Fund Transfer (EFT) Authorization Form (code BK58a), located in E-Forms in the secure section of the TRS website.

Tax Consequences

The taxable portion of TDA fund withdrawals is taxable upon receipt and will be reported to the IRS in January of the following calendar year.

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

You must select whether to have 10% withholding 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 TDA funds available for hardship withdrawal. (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.)

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

If you are requesting a hardship withdrawal, this is the page where you will select what portion of your post 1988 TDA contributions will be withdrawn from your TDA Program account.

You must indicate the specific dollar amount you want to withdraw from the total balance of your TDA Program account; 100% of the distribution must be paid directly to you.

Withholding Options

In addition, you must select whether or not to have 10% withholding 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 TDA funds available for hardship withdrawal.

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

TDA Hardship Withdrawal Application—Description and Questionnaire

This is the page 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., <,>, !, @, #, %, ^, &, *, +).

You must complete the questionnaire, answering each question, even if you are not eligible for the resource listed.

Note: If you have not maximized your available resources, you should not file this application; you should instead apply for those resources.

This page provides a summary of your TDA withdrawal. Please review the details of your TDA withdrawal to make sure your elections are as you intended.

If you are not satisfied with your elections, click "Previous." You will be taken back to the previous page where you can change your elections.

If you are requesting a hardship withdrawal, you must provide supporting documents, either by uploading them through this site or by mailing them. If you mail your documents, please click the TDA Hardship Withdrawal Documentation Cover Sheet link, print out the cover sheet, complete it, and mail it to TRS. Use of this cover page will enable us to process your supporting documents more effectively. Your application cannot be reviewed until supporting documentation is submitted.

If you are satisfied with your elections, carefully read and accept the Terms & Conditions and then click "Finish."

Please refer to the Your Tax-Deferred Annuity Program for more information about withdrawing funds from your TDA Program account.

Payment Method: All withdrawals will be paid to members by electronic deposit to a bank account; TRS will not issue checks for withdrawals. If you want to take a withdrawal, your bank account information must be on file with TRS. For in-service members paid on the Department of Education payroll, and retirees paid electronically, the bank information is already on file. Other members can provide their bank account information by submitting an online EFT Authorization Form. Please note that if you do not provide TRS with your bank account information within five business of submitting a withdrawal application, your application will be rejected.

• Non-hardship withdrawals would generally be distributed within 15 to 45 days after TRS receives your application.
• Hardship withdrawals would generally be issued on the next available payroll after your application is approved.