TRS Texas Partial Lump-Sum Option (PLSO) to Gold IRA
Short on time? The essentials
- PLSO is authorized by Texas Government Code Section 824.2045, checked August 2026.
- The lump-sum distribution cannot exceed 36 months of a standard service retirement annuity (Section 824.2045).
- Members choose one of three lengths: 12 months, 24 months, or 36 months of the standard annuity, per the archived TRS Partial Lump-Sum Option page, checked August 2026.
- A 12-month PLSO is paid at the same time as the first monthly annuity payment. A 24-month PLSO can be paid in one or two annual payments. A 36-month PLSO can be paid in one, two, or three annual payments (Section 824.2045).
- Electing PLSO permanently reduces the retiree's monthly annuity, actuarially computed so no actuarial loss results to TRS (Section 824.2045).
- PLSO can be elected only once and cannot be elected by a member retiring under the Proportionate Retirement Program or who is participating in the Deferred Retirement Option Plan (Section 824.2045).
- TRS does not pay interest on PLSO balances during distribution, per the archived TRS Partial Lump-Sum Option FAQ, checked August 2026.
- A PLSO distribution is an eligible rollover distribution; TRS must withhold 20 percent for federal income tax unless the eligible portion is rolled directly to a qualified plan or IRA, per IRS Topic 413, checked August 2026.
- A direct trustee-to-trustee rollover to a Traditional IRA moves the full amount with 0 dollars of federal tax owed at the time of the transfer (IRS Topic 413).
- Texas has no state personal income tax, so a taxable PLSO distribution is federally taxed only.
- Inside a self-directed Traditional IRA, IRS-approved gold at 0.995 minimum fineness, silver at 0.999, platinum and palladium at 0.9995 can be purchased and stored at an IRS-approved depository, including the state-run Texas Bullion Depository in Leander.
On this page
- What the TRS PLSO actually is
- Who can elect PLSO and who cannot
- Amount options and payment schedule
- The permanent monthly annuity reduction
- Why a direct rollover almost always beats a cash payout
- Step by step: PLSO to a self-directed gold IRA
- Worked example: a 108,000 dollar PLSO at age 60
- What "gold IRA" actually means inside the IRA
- When this is a bad idea
- Frequently asked questions
- Sources
What the TRS PLSO actually is
The Teacher Retirement System of Texas pays a defined-benefit monthly annuity for life to eligible retirees. The Partial Lump-Sum Option lets an eligible member trade a slice of that lifetime monthly annuity for cash paid at retirement. The statute is Texas Government Code Section 824.2045.
The lump sum is expressed in months of a standard service retirement annuity. Members choose 12, 24, or 36 months. Section 824.2045 caps the total at 36 months of a standard annuity. The 36-month option is the maximum.
PLSO does not add money. It changes the shape of the pension by converting future monthly payments into a present cash payment. The monthly annuity paid for life is then actuarially reduced so that no actuarial loss results to TRS.
A PLSO election is made once, at retirement, and it is irrevocable. A retiree already receiving an annuity cannot go back and elect PLSO later. This is explicit in Section 824.2045.
Who can elect PLSO and who cannot
Per the archived Teacher Retirement System of Texas Partial Lump-Sum Option page, checked August 2026, PLSO carries two negative conditions and one positive condition. The member must not be participating in the Deferred Retirement Option Plan. The member must not be retiring under the Proportionate Retirement Program. In addition, one of two positive conditions must be met:
- The member is grandfathered under TRS retirement eligibility. The member is age 65 with at least five years of service credit, or meets the Rule of 80 with at least five years of service credit. The Rule of 80 means combined age and years of service credit total at least 80.
- The member is eligible for a service retirement annuity, reduced or unreduced, and the member's age plus years of service credit total at least 90.
Two categories are excluded by statute. A member who is participating in the Deferred Retirement Option Plan cannot elect PLSO. A member who retires under the Proportionate Retirement Program under Chapter 803 also cannot elect PLSO (Section 824.2045).
The eligibility rules turn on grandfathered status and service credit; always confirm your specific eligibility with TRS before signing PLSO paperwork. A benefits counselor can run the numbers on your actual account.
Amount options and payment schedule
Section 824.2045 and the archived Teacher Retirement System of Texas Partial Lump-Sum Option page, checked August 2026, set three amount options and matching payment schedules.
- 12 months of a standard annuity: paid as a single lump sum at the same time as the first monthly annuity payment.
- 24 months of a standard annuity: paid in one lump sum, or in two equal annual payments.
- 36 months of a standard annuity: paid in one lump sum, or in two or three annual payments.
Per the archived TRS Partial Lump-Sum Option FAQ, checked August 2026, TRS does not pay interest on PLSO balances during a multi-year distribution. A 24-month or 36-month election spread across two or three annual payments is not credited with interest by TRS during that period.
The permanent monthly annuity reduction
Every PLSO election permanently reduces the retiree's monthly annuity for life. Section 824.2045 requires the annuity and lump sum to be computed so no actuarial loss results to TRS. The reduction factor depends on the retiree's age and the length of the PLSO.
The archived Teacher Retirement System of Texas Partial Lump-Sum Option page, checked August 2026, publishes an actuarial reduction table by age. At retirement age 60, for example, the monthly annuity is reduced to 90.46 percent of standard for a 12-month PLSO, 80.91 percent for a 24-month PLSO, and 71.37 percent for a 36-month PLSO.
A member with a 3,000 dollar unreduced monthly annuity at age 60 who elects a 36-month PLSO would receive a 108,000 dollar lump sum, which is 3,000 dollars multiplied by 36. The monthly annuity would drop to about 2,141 dollars, which is 3,000 dollars multiplied by 71.37 percent, for the rest of the retiree's life.
The chart below plots the PLSO lump-sum amount at each of the three election lengths for a 3,000 dollar per month standard annuity. The actuarial reduction to the monthly benefit is layered on top; both numbers come out of the standard annuity, not on top of it.
Why a direct rollover almost always beats a cash payout
A PLSO distribution is an eligible rollover distribution under federal tax law because it is paid from a qualified governmental plan. The mechanical choice is between a direct rollover and a payment to the member.
Under a direct rollover, TRS wires the eligible portion straight to the receiving IRA or qualified plan custodian. Per IRS Topic 413, checked August 2026, the mandatory 20 percent federal withholding does not apply on a direct rollover. No federal income tax is owed at the time of the transfer.
Under a payment to the member, TRS is required to withhold 20 percent of the eligible portion for federal income tax before the check is issued. That is not the final tax; ordinary federal income tax applies at the member's marginal bracket for the year.
If the member is under age 59 and a half and no statutory exception applies, IRS Topic 558 adds a 10 percent additional tax on early distributions. Common exceptions include the age-55 separation exception for qualified plans and the substantially equal periodic payments rule under IRC 72(t).
Texas is the piece most rollover explainers leave out. The Texas Comptroller confirms there is no state personal income tax, so a taxable PLSO payout is taxed only at the federal level. A retired teacher in Amarillo keeps the same after-tax dollars as one in Sugar Land; there is no state layer added on top of federal withholding.
Step by step: PLSO to a self-directed gold IRA
The five-step process
Confirm PLSO eligibility with TRS before signing anything.
Contact TRS at 1000 Red River Street, Austin, Texas 78701 or by phone at 1-800-223-8778, per the TRS Contact page. Ask a benefits counselor to confirm your PLSO eligibility (grandfathered status, Rule of 80, or age plus service of at least 90), and to run the exact monthly annuity reduction at 12, 24, and 36 months. Get the numbers in writing.
Open a self-directed Traditional IRA with a qualified custodian that accepts physical metals.
Regular brokerage IRAs will not hold bullion. Ask the self-directed custodian for the fee schedule in writing before you fund the account. Fees typically include an account setup fee, an annual custodial fee, and a depository storage fee. Compare at least two custodians against a written fee schedule and preferred depository.
Elect PLSO on your TRS retirement paperwork and request a direct rollover.
Per Section 824.2045, TRS provides a written notice of the amount by which your annuity will be reduced. You will be asked to sign a receipt for that notice. On the retirement application, indicate the PLSO length (12, 24, or 36 months) and elect a direct trustee-to-trustee rollover of the eligible portion to your new self-directed IRA custodian.
Provide the receiving self-directed IRA custodian name, address, and account number. Keep a copy of the signed election with the actuarial reduction notice for your records.
Instruct the self-directed IRA custodian to buy IRS-approved metal.
Under Internal Revenue Code Section 408(m), an IRA can only hold gold at 0.995 minimum fineness, silver at 0.999, and platinum and palladium at 0.9995. A statutory exception applies to the 22-karat American Gold Eagle. The dealer sells the metal to the custodian, not to you personally. Home storage of IRA-owned metal is treated as a distribution under the 2021 McNulty v. Commissioner Tax Court ruling.
Route the metal to an IRS-approved depository.
Texas residents have the option of the state-run Texas Bullion Depository in Leander, which confirms on its IRA Storage Services page, checked August 2026, that the depository is available for IRA storage. Private options such as Delaware Depository or Brinks Global Services also qualify. Confirm the storage type is segregated or non-segregated per your custodian's policy before you send metal.
Worked example: a 108,000 dollar PLSO at age 60
The federal-only calculator below runs the same numbers with your inputs so you can see the cost of a cash payout at your own age, balance, and bracket. Texas residents can leave any state field alone because Texas does not tax the distribution.
Texas gold IRA early-withdrawal penalty estimator
Take money out of a gold IRA before age 59 and a half and the IRS adds a 10% federal additional tax. Many states add their own additional tax on top, so check your state. The federal penalty is estimated below.
Estimate only, not tax advice. The 10% federal additional tax applies to early distributions before age 59 and a half; exceptions exist. Your state may add its own additional tax, and ordinary income tax applies separately. Source: IRS Publication 590-B. Consult your tax advisor.
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What "gold IRA" actually means inside the IRA
Once the PLSO money is inside a self-directed Traditional IRA, the label "gold IRA" is only a marketing description. The IRS calls it a self-directed IRA that happens to hold IRS-approved bullion or coins. The container is a normal Traditional IRA.
Standard federal rules keep applying. Required minimum distributions begin at age 73 for members born 1951 to 1959, and at age 75 for members born 1960 or later, under the SECURE 2.0 Act. The 2026 IRA contribution ceiling is 7,500 dollars, plus a 1,100 dollar catch-up for age 50 or older, per the IRS Retirement Topics IRA Contribution Limits page for 2026.
What changes is the asset. Under IRC 408(m), the IRA can hold gold, silver, platinum, and palladium bullion or coins that meet the fineness thresholds listed earlier, plus the statutory American Gold Eagle exception. Rare or numismatic coins, pre-1965 "junk" silver, and the South African Krugerrand are not IRA-eligible.
The comparison table below uses verified sources only, with no invented figures.
| Container | Federal tax at settlement moment | Assets allowed | Texas state income tax | RMD starting age |
|---|---|---|---|---|
| Self-directed Traditional IRA holding IRS-approved bullion | 0 dollars owed on direct rollover | Gold 0.995, silver 0.999, platinum and palladium 0.9995, plus American Gold Eagle | 0 percent (no state personal income tax) | 73 or 75 per birth year, SECURE 2.0 |
| Brokerage Traditional IRA (stocks, ETFs, mutual funds) | 0 dollars owed on direct rollover | Public securities; no physical bullion | 0 percent | 73 or 75 per birth year, SECURE 2.0 |
| PLSO cash payment kept in a taxable account | Mandatory 20 percent federal withholding on the eligible portion; 10 percent additional tax if under age 59 and a half and no exception applies | Anything; no IRS restriction | 0 percent | Not applicable |
| No PLSO: full lifetime standard monthly annuity from TRS | 0 dollars owed at retirement; each monthly annuity payment is federally taxable when paid | Not applicable; TRS pays a fixed monthly amount | 0 percent | Not applicable; the monthly annuity is paid on a fixed schedule |
When this is a bad idea
PLSO into a gold IRA is not always the right call. A few honest cases where it can backfire:
- You depend on the full monthly TRS annuity for basic living expenses. A 36-month PLSO at age 60 cuts the monthly benefit by roughly 28.6 percent for life. That is a permanent drop, not a temporary one.
- Your PLSO lump sum is small relative to gold IRA fixed costs. Custodial and storage fees are a fixed dollar amount that eats a bigger share of a 36,000 dollar 12-month PLSO than of a 108,000 dollar 36-month PLSO.
- You spread the PLSO across two or three annual payments and forget that TRS does not pay interest on PLSO balances during distribution. Those dollars sit uncredited at TRS until the annual payment date.
- You would rather keep the full TRS monthly annuity and hedge with a separate savings account. The lifetime monthly annuity is a rare source of guaranteed income; trading part of it for a lump sum you must then manage is not a small decision.
- You have not yet spoken to a tax advisor about the 20 percent mandatory federal withholding, the interaction with any 403(b) side account, or the timing of a Roth conversion done later. Cash decisions taken without that math can be expensive to undo.
Frequently asked questions
Frequently asked questions
Can I roll a TRS PLSO distribution into a gold IRA?
Yes, indirectly. Per IRS Topic 413, checked August 2026, a PLSO distribution from TRS is an eligible rollover distribution and can be sent directly by TRS to a Traditional IRA. Once inside a self-directed Traditional IRA at a custodian that accepts physical metals, IRC 408(m) allows the IRA to buy IRS-approved gold, silver, platinum, and palladium bullion or coins.
What is the largest PLSO I can elect?
Per Texas Government Code Section 824.2045, the maximum PLSO is 36 months of a standard service retirement annuity. The archived Teacher Retirement System of Texas Partial Lump-Sum Option page, checked August 2026, confirms members choose one of three lengths: 12, 24, or 36 months. A 36-month PLSO can be paid in one lump sum, or in two or three annual payments.
Will electing PLSO reduce my TRS monthly annuity?
Yes, permanently. Section 824.2045 requires the monthly annuity to be actuarially reduced so no actuarial loss results to TRS. Per the archived Teacher Retirement System of Texas Partial Lump-Sum Option page, checked August 2026, a retiree at age 60 who elects a 36-month PLSO receives 71.37 percent of the standard monthly annuity for life. The reduction factor varies by retirement age; ask TRS for your exact number in writing.
Am I eligible for PLSO?
Per the archived Teacher Retirement System of Texas Partial Lump-Sum Option page, checked August 2026, PLSO is available to members who meet three conditions. First, the member must not be participating in the Deferred Retirement Option Plan. Second, the member must not be retiring under the Proportionate Retirement Program.
The third condition can be met one of two ways. The member is grandfathered and either age 65 with five years of service credit, or meets the Rule of 80 with five years of service credit. Alternatively, the member is eligible for a service retirement annuity with age plus service of at least 90. Confirm your specific eligibility with a TRS benefits counselor.
Does TRS pay interest on PLSO balances during a multi-year distribution?
No. Per the archived TRS Partial Lump-Sum Option FAQ, checked August 2026, TRS does not pay interest on PLSO balances during distribution. If you elect a 24-month or 36-month PLSO spread across two or three annual payments, the remaining balance is held by TRS without interest until the next annual payment date.
Can I store the gold at home if the IRA owns it?
No. IRA-owned metal must be held by an IRS-approved depository. Home storage is treated as a distribution of the full metal value, plus any additional tax if you are under age 59 and a half and no exception applies. The 2021 McNulty v. Commissioner Tax Court case is the reference precedent.
Where can I store the metal inside Texas?
The state-run Texas Bullion Depository in Leander confirms on its IRA Storage Services page, checked August 2026, that the depository is available for IRA storage. Private depositories such as Delaware Depository and Brinks Global Services also accept precious-metals IRA holdings. Custodian policy and fee schedule decide the specific vault used.
Do rollovers count against my 2026 IRA contribution limit?
No. Rollovers and direct trustee-to-trustee transfers are separate from annual contributions. The IRS Retirement Topics IRA Contribution Limits page for 2026 sets the standard IRA contribution ceiling at 7,500 dollars, with an extra 1,100 dollar catch-up for age 50 or older. A PLSO rollover of any size does not count against that number.
Sources
- Texas Legislature. "Government Code Chapter 824, Sec. 824.2045 (Partial Lump-Sum Option)." statutes.capitol.texas.gov/Docs/GV/htm/GV.824.htm. Checked August 2026.
- Teacher Retirement System of Texas. "Partial Lump-Sum Distribution" (archived on the Internet Archive, July 2015 snapshot). web.archive.org, TRS PLSO page. Checked August 2026.
- Teacher Retirement System of Texas. "FAQs: Partial Lump-Sum Option (PLSO)" (archived on the Internet Archive, December 2015 snapshot). web.archive.org, TRS PLSO FAQ. Checked August 2026.
- Teacher Retirement System of Texas. "Contact TRS." trs.texas.gov/Pages/re_contact_us.aspx. Checked August 2026.
- Internal Revenue Service. "Topic no. 413, Rollovers from retirement plans." irs.gov/taxtopics/tc413. Checked August 2026.
- Internal Revenue Service. "Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs." irs.gov/taxtopics/tc558. Checked August 2026.
- Internal Revenue Service. "Retirement Topics: IRA Contribution Limits (2026)." irs.gov/retirement-plans. Checked August 2026.
- Internal Revenue Service. "Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)." irs.gov/publications/p590b. Checked August 2026.
- Texas Bullion Depository. "IRA Storage Services." texasbulliondepository.gov/ira-storage. Checked August 2026.
- Texas Comptroller of Public Accounts. "Taxes." comptroller.texas.gov/taxes/. Checked August 2026.