Rolling a TMRS (Texas Municipal) Account Into a Gold IRA

Affiliate disclosure: we may earn a commission when a reader opens an account through links on this page. The commission has no effect on what you pay or on what we publish. We are not a financial or tax advisor; consult a licensed advisor for your situation. Last reviewed July 2026.

Short on time? The essentials

• Your monthly TMRS retirement benefit is a lifetime annuity and is not eligible for rollover. Only cash distributions from TMRS can move to a gold IRA.
• The Partial Lump Sum Distribution (PLSD) lets a retiring member elect a lump sum equal to the Retiree Life Only monthly benefit multiplied by 12, 24, or 36 months. TMRS caps the PLSD at 75 percent of the member deposits and interest.
• The PLSD is deducted from the total used to compute your monthly benefit, so the monthly benefit is reduced for life once you elect it. TMRS states the PLSD can be rolled into an IRA or other qualified plan to continue deferring income tax.
• A refund pays your member deposits plus the 5 percent interest TMRS credited each year. The refund never includes any city matching funds. Vesting terminates and the future lifetime benefit built from that service is forfeited.
• Non-vested members can leave the account earning 5 percent for up to 5 years, after which a refund is required and TMRS membership ends. Vested members can leave the account earning 5 percent until retirement.
• A direct rollover avoids the 20 percent mandatory federal income tax withholding that IRC Section 3405 applies to any eligible rollover distribution paid to the retiree, and it skips the 60-day redeposit clock.
• Inside the self-directed IRA, cash buys IRS-approved bullion or coins meeting IRC 408(m)(3) fineness. Gold minimum purity is 99.5 percent; silver 99.9 percent; platinum and palladium 99.95 percent. The American Gold Eagle qualifies at 91.67 percent by statute.
• Texas has no state personal income tax under Article 8, Section 24 of the Texas Constitution. The state-run Texas Bullion Depository accepts IRA storage through Lone Star Tangible Assets, which received IRS approval as a nonbank trustee in 2023.
• Home storage of IRA metal is not allowed. The 2021 Tax Court ruling in McNulty v. Commissioner treats it as a full distribution.

See the Augusta Precious Metals gold IRA company checklistAugusta is our primary affiliate partner. The free checklist gives you a clean way to vet any provider you call about a TMRS PLSD or refund rollover.Print / save as PDF

On this page

• What TMRS cash forms can move to a gold IRA
• The Partial Lump Sum Distribution in detail
• The refund of your member account in detail
• Why your city plan sets the account size
• The TMRS-to-gold-IRA rollover in eight steps
• Direct vs indirect: the 20 percent withholding rule
• The age 55 penalty exception and what happens when you roll
• What gold the IRA can hold
• Texas advantages: zero state tax and the Texas Bullion Depository
• TMRS PLSD amounts at a glance
• The gold IRA fee stack you will see
• Check whether your TMRS distribution is eligible to roll
• Worked example: an Austin water department retiree rolls a 24-month PLSD
• When rolling a TMRS distribution into a gold IRA is a bad idea
• TMRS to gold IRA FAQ

What TMRS cash forms can move to a gold IRA

TMRS is a hybrid cash-balance defined benefit plan. It pays a monthly lifetime retirement benefit once a member retires, calculated from the member deposits plus interest, plus a city match set by the participating city, plus optional plan features like Updated Service Credit and cost-of-living adjustments. That monthly benefit is not eligible for rollover. IRS Publication 575 excludes any distribution that is part of a series of substantially equal payments over the recipient's life expectancy.

Two TMRS cash forms are eligible for rollover to a self-directed IRA holding IRS-approved bullion. The first is a Partial Lump Sum Distribution elected at retirement. The second is a full refund of the member's accumulated deposits plus interest after permanent separation from all TMRS participating cities.

The Partial Lump Sum Distribution in detail

TMRS defines the Partial Lump Sum Distribution as a one-time payment taken from the member account at retirement. The size is the Retiree Life Only monthly benefit multiplied by 12, 24, or 36 months. TMRS states plainly that the PLSD cannot exceed 75 percent of the member deposits and interest.

The lump sum is then deducted from the total balance used to calculate the monthly benefit. A new, reduced monthly retirement benefit is determined and paid for life. TMRS applies the reduction whether the retiree elects Retiree Life Only or one of the six survivor and guaranteed-term retirement options.

TMRS states directly that the PLSD is subject to income tax and possibly an additional 10 percent tax penalty at the time of payment. That penalty is the federal early-withdrawal tax under IRC Section 72(t). TMRS also states that the member can roll the PLSD into an IRA or other qualified plan to continue deferring income tax on the amount rolled.

The PLSD size does not stack with other options. It is a one-time election made at retirement, alongside the choice of retirement option. TMRS retirement estimates are available for each retirement option and for any PLSD amount, so members can model the tradeoff in MyTMRS before filing.

Two categories should confirm before assuming eligibility. Disability retirees and members electing early or unreduced service retirement should verify with a TMRS retirement counselor whether the 75 percent cap or their reduced monthly benefit changes the PLSD math. And a member close to the 75 percent cap should model the exact figure, since the cap can bind before the 36-month formula.

The refund of your member account in detail

TMRS pays a refund only to a member who has separated from every TMRS participating city and has not returned to TMRS-covered employment. It is not available to active members or to retirees drawing a monthly benefit. If the member returns to TMRS employment before the refund is issued, the refund application is cancelled.

The refund pays the accumulated member deposits plus the 5 percent interest TMRS credits to the account each year. TMRS states directly that the refund does not include any city matching funds. The city match sits in a separate reserve and is applied to the annuity calculation only if the member retires from TMRS.

A refund forfeits future retirement benefits from that service. For a non-vested member, the account balance can stay with TMRS for up to 5 years and continue earning 5 percent, after which a refund is required and TMRS membership terminates. For a vested member, the balance can stay indefinitely and continue earning 5 percent until retirement.

The paperwork for a refund is a single Refund Application that can be submitted online through MyTMRS or by mail or fax. TMRS attaches the Special Tax Notice Regarding Plan Payments to the application. That notice walks through direct rollover mechanics, the 20 percent federal withholding rule for a payment made to the member, and the 60-day redeposit clock.

Two operational notes matter for a rollover. TMRS cannot issue the refund until the final city contribution posts, which can take up to eight weeks. And TMRS states that the refund may be held or delayed if records show a return to TMRS-covered employment or an outstanding legal obligation to the state.

Why your city plan sets the account size

TMRS is administered statewide but the benefit design is set by each participating city. Cities choose several plan levers when they adopt or amend a TMRS plan. Those levers set how large your member account grows before you ever reach a PLSD or refund decision.

The practical takeaway for a rollover. A member in a 7 or 8 percent city has built a bigger member account than a member in a 5 percent city, so both the refund and the PLSD start from a larger base. City match ratios are relevant to the annuity, not to the refund. Refunding always leaves the city match behind.

The TMRS-to-gold-IRA rollover in eight steps

The mechanical sequence is the same whether the TMRS cash is a PLSD election at retirement or a refund of member deposits after separation. The order of operations does not change with the funding source.

1. Confirm the TMRS distribution is eligible for rollover. A PLSD election and a full refund of member deposits are both eligible rollover distributions. A monthly TMRS retirement benefit is not.
2. Open a self-directed IRA. A precious-metals IRA requires a qualified non-bank trustee or self-directed IRA custodian. Equity Trust Company, STRATA Trust, and GoldStar Trust are commonly used with Texas accounts, and Equity Trust is the current custodian for storage at the Texas Bullion Depository.
3. Pick a gold IRA dealer. The dealer sources the metal and coordinates with the custodian. Verify the dealer partners with your chosen custodian and quotes tight spreads on common bullion.
4. Request the appropriate TMRS paperwork. For a refund, request the Refund Application through MyTMRS or by contacting TMRS; the Special Tax Notice Regarding Plan Payments is attached. For a PLSD, the rollover election is completed at retirement alongside the retirement option choice.
5. Complete the rollover election. Enter the receiving custodian by name, "for the benefit of" your new IRA account number, and the amount to be rolled. Have the receiving custodian sign to certify the plan is eligible to receive the rollover.
6. Submit the paperwork and let the direct rollover fund the IRA. The check or wire is made payable to the custodian, not to you. No federal withholding applies. No 60-day clock runs.
7. Place the metal order. Once the cash arrives inside the new IRA, instruct the custodian to pay the dealer for IRS-approved bullion or coins meeting IRC 408(m)(3) fineness rules. The dealer ships to an IRS-approved depository.
8. File the right forms next April. TMRS issues Form 1099-R with distribution code G for a direct rollover. The receiving custodian issues Form 5498. Report the gross amount on Form 1040 line 5a with a taxable amount of zero on line 5b.

Direct vs indirect: the 20 percent withholding rule

Federal rollover mechanics offer two paths. A direct rollover sends the TMRS cash from the plan straight to the receiving IRA custodian. No withholding applies. No 60-day clock starts. This is the default recommendation on any TMRS PLSD or refund rollover.

A payment made to the retiree instead triggers IRC Section 3405. TMRS states that if you do not roll the refund into an IRA or other qualified plan, the IRS requires TMRS to withhold 20 percent of the refund. The retiree then has 60 days to redeposit the full pre-withholding amount into the new IRA. The missing 20 percent has to come from personal savings during that window.

The 20 percent withholding is later credited against the federal tax bill at filing. If the retiree redeposited the full pre-withholding amount on time, the credit returns as part of the refund. If the retiree redeposits only the 80 percent that arrived, the missing 20 percent is treated as a taxable distribution. A 10 percent federal early-withdrawal penalty stacks on top for retirees under age 59 and a half unless an exception fits.

Failing the 60-day window has narrow relief. IRS Revenue Procedure 2016-47 and later guidance allow a self-certification waiver in a defined list of hardships, such as a plan administrator error or a serious illness. Do not plan on that safety net.

The age 55 penalty exception and what happens when you roll

IRC Section 72(t)(2)(A)(v) allows a penalty-free distribution from a qualified employer plan on a member who separates from service in or after the calendar year they turn 55. TMRS is a governmental qualified plan. A refund taken directly from TMRS at age 55 or older is not subject to the 10 percent federal early-distribution penalty. The distribution is still taxable federally.

The exception does not survive a rollover. Once TMRS cash moves into an IRA, the IRA distribution rules apply. The 10 percent penalty reappears on any IRA withdrawal before age 59 and a half unless a different IRA-side exception fits.

Practical implication for a city employee separating between 55 and 59 and a half. If some of the cash is needed for living expenses within the next few years, keeping a portion of the account inside a different qualified plan preserves the age 55 penalty-free path. TMRS does not allow a partial refund; the refund is all-or-nothing. Members who need short-term cash usually solve this through a next-employer 401(k), 403(b), or 457(b) if one is available.

What gold the IRA can hold

IRC Section 408(m) generally bans collectibles inside an IRA and then carves out an exception for bullion and certain coins that meet a fineness threshold. The gold floor is 99.5 percent purity. Silver is 99.9 percent. Platinum and palladium are 99.95 percent.

Two coins are named statutory exceptions inside the rule. The American Gold Eagle is IRA-eligible at 91.67 percent purity, which is 22-karat. The American Silver Eagle is IRA-eligible at 99.9 percent. Proof Eagles qualify when held in original mint packaging with the certificate.

Bars must come from a refiner or assayer approved by NYMEX, COMEX, LBMA, or produced by a national government mint. Common eligible names include PAMP Suisse, Credit Suisse, Valcambi, the Royal Canadian Mint, and the Perth Mint.

Common eligible coins include the American Gold Eagle by statute, the American Gold Buffalo at 99.99 percent, the Canadian Gold Maple Leaf at 99.99 percent, the Austrian Gold Philharmonic at 99.99 percent, and the Australian Kangaroo at 99.99 percent. The South African Krugerrand sits at 91.67 percent gold with no statutory exception, and it is not IRA-eligible.

Texas advantages: zero state tax and the Texas Bullion Depository

Two Texas features change the wrapper around a federal rollover.

Article 8, Section 24 of the Texas Constitution prohibits a state personal income tax. Any taxable IRA distribution, including a botched indirect rollover, a future required minimum distribution, or a partial cash retention from a TMRS PLSD, is taxed at the federal level only. A Texas resident does not pay a state layer on top.

Texas also runs its own bullion depository. The Texas Bullion Depository is an agency of the State of Texas, authorized by House Bill 483 signed by Governor Greg Abbott on June 12, 2015. It has operated since 2017 on a purpose-built 10-acre campus in Leander, Texas, with Lone Star Tangible Assets LP as the depository contractor.

IRA storage is available at the depository. The Texas Bullion Depository states plainly that it is available for IRA storage through its operator LSTA, which received IRS approval as a nonbank trustee in 2023. Equity Trust Company is the first self-directed IRA custodian that works with the depository, and TMRS members retiring in Texas can ask their dealer to coordinate delivery with Equity Trust.

Storage features published on the depository's site include a purpose-built high-security facility with 24/7 monitoring, insurance through Lloyd's of London, and segregated storage without commingling of client metal. IRA storage fees are negotiated between the custodian, the gold dealer, and the depository contractor. They can differ from the standard retail schedule.

TMRS PLSD amounts at a glance

The TMRS formula multiplies the Retiree Life Only monthly benefit by 12, 24, or 36 months, subject to the 75 percent cap on member deposits and interest. The chart below shows the three formula amounts for an illustrative member with a Retiree Life Only monthly benefit of 2,500 dollars.

Two clarifications on the chart. The three bars scale linearly with the 12, 24, and 36 month election because the TMRS formula multiplies the Retiree Life Only monthly by that number of months. And the 75 percent cap can bind before the 36-month figure. A member with 100,000 dollars in member deposits and interest hits the cap at 75,000 dollars, so a 36-month PLSD is limited to that cap even though the formula produces 90,000 dollars.

The gold IRA fee stack you will see

TMRS itself does not charge a member a visible administration fee on the PLSD or on a refund; the system absorbs those costs. A self-directed gold IRA carries its own fee stack, with several stacked line items the retiree pays directly.

The dealer markup is the line item with the widest range. Common bullion coins and bars carry tight spreads. Premium or proof coins marketed as exclusive or limited carry markups that can be several times higher. A clean TMRS rollover is undone quickly if the metal is bought at a 25 or 35 percent markup over spot.

Check whether your TMRS distribution is eligible to roll

Before calling a provider, confirm the TMRS payment is actually eligible to roll under federal rules. The screening tool below walks through the eligibility questions and timing rules. It is a triage step, not legal or tax advice.

Can you roll your account into a gold IRA? Eligibility checker

Most retirement money can move into a gold IRA once it is an eligible rollover distribution. Pick your account and situation for a general answer. Always confirm the specifics with your plan administrator or custodian.

Account typeTraditional IRARoth IRASEP IRASIMPLE IRA401(k) or 403(b) from a former employer401(k) or 403(b) at your current employerGovernmental 457(b)Thrift Savings Plan (TSP)Pension lump sum or refund (after you separate) Your situationSeparated from that employerStill employed there, under 59 and a halfStill employed there, age 59 and a half or older

Check eligibility

General guidance only, not tax or financial advice. Eligibility depends on your specific plan document and IRS rules; confirm with your plan administrator and a tax advisor. A direct trustee-to-trustee transfer avoids the 60-day rule and 20% withholding.

Picking a company that explains every fee up front is the first step. Get the free gold IRA company checklist.

Worked example: an Austin water department retiree rolls a 24-month PLSD

Your next step

If a TMRS PLSD or refund rollover into a gold IRA looks like the right move, the highest-leverage action is to vet the provider before signing any TMRS distribution paperwork. Augusta Precious Metals is our primary affiliate partner and publishes a free gold IRA company checklist built for that vetting step.

Get the Augusta Precious Metals gold IRA company checklistSponsored link. Use it to evaluate any provider you call, including Augusta itself. Past performance is not a guarantee of future results.

When rolling a TMRS distribution into a gold IRA is a bad idea

TMRS to gold IRA FAQ

Sources

1. Texas Municipal Retirement System. Refunding Your Account. tmrs.com/refund-your-account. Checked July 2026.
2. Texas Municipal Retirement System. Ready for Retirement (PLSD and retirement options). tmrs.com/ready-for-retirement. Checked July 2026.
3. Texas Municipal Retirement System. Understanding Your Benefits (vesting). tmrs.com/understanding-your-benefits. Checked July 2026.
4. Texas Municipal Retirement System. City Plan Comparison Tool (city-selected plan features). tmrs.com/city-plans. Checked July 2026.
5. Texas Municipal Retirement System. Refund Application and Special Tax Notice Regarding Plan Payments. tmrs.com/forms. Checked July 2026.
6. Internal Revenue Service. Publication 575: Pension and Annuity Income. irs.gov/publications/p575. Checked July 2026.
7. Internal Revenue Service. Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs). irs.gov/publications/p590a. Checked July 2026.
8. Internal Revenue Service. Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs). irs.gov/publications/p590b. Checked July 2026.
9. Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions. irs.gov/retirement-plans. Checked July 2026.
10. Internal Revenue Service. Topic No. 413, Rollovers from Retirement Plans. irs.gov/taxtopics/tc413. Checked July 2026.
11. Internal Revenue Service. Topic No. 558, Additional Tax on Early Distributions from Retirement Plans. irs.gov/taxtopics/tc558. Checked July 2026.
12. Internal Revenue Code Section 402(c). Rollovers from qualified plans. uscode.house.gov. Checked July 2026.
13. Internal Revenue Code Section 401(a)(31). Direct rollover option. uscode.house.gov. Checked July 2026.
14. Internal Revenue Code Section 3405. Special rules for pensions, annuities, and certain other deferred income; 20 percent mandatory withholding. uscode.house.gov. Checked July 2026.
15. Internal Revenue Code Section 408(m). Collectibles rule and bullion exception. uscode.house.gov. Checked July 2026.
16. Internal Revenue Code Section 72(t)(2)(A)(v). Separation-from-service exception at age 55. uscode.house.gov. Checked July 2026.
17. United States Tax Court. McNulty v. Commissioner, 157 T.C. No. 10 (November 18, 2021). Home-storage IRA confirmed as a full distribution.
18. Texas Bullion Depository. IRA Storage Services. texasbulliondepository.gov. Checked July 2026.
19. Office of the Texas Comptroller of Public Accounts. Texas Bullion Depository overview. comptroller.texas.gov. Checked July 2026.
20. Texas Constitution, Article 8, Section 24. Prohibition on a state personal income tax. statutes.capitol.texas.gov. Checked July 2026.

By the Harry’s Coins Editorial team. Last reviewed July 2026.