Short answer: most or all of a Washington TRS pension is subject to federal income tax, because contributions were usually pre-tax. State law exempts it from any state, county or local tax. DRS withholds federal tax unless you file a W-4P and sends a 1099-R each year. Taking money out early can add a federal penalty. See leaving teaching, Plan 3's account and Social Security. Estimate your pension.
Federal income tax
Most, if not all, of your pension is subject to federal income tax (contributions were usually pre-tax). DRS withholds as single with no adjustments unless you file a W-4P; you receive a 1099-R each year. DRS Washington TRS Plan 2 page, Federal taxes on your benefit; DRS TRS23RAPP 11/2022, p. 7, IRS Tax Withholding
State and local tax
RCW 41.32.052(1) exempts Washington TRS pensions and allowances from 'any state, county, municipal or other local tax'. DRS does not deduct any individual state tax from Plan 3 pension payments, no matter where you live. RCW 41.32.052(1); DRS Washington TRS Plan 3 page, Pension benefit (employer contributions)
No saved source says whether Washington has a state income tax, or how other states tax a Washington pension. So we don't say whether moving out of Washington changes anything. Ask a tax advisor in your new state.
Early withdrawals
Cashing out tax-deferred contributions before 55 (Plan 1 withdrawal at retirement) or before 59 1/2 (Plan 3 investment account, post-30 refund) may add a 10% IRS tax. DRS TRS1RAPP 11/2022, p. 3, Option to Withdraw Contributions; DRS Washington TRS Plan 3 page, How is my withdrawal taxed?
Plan 3 investment account: Withdrawals are subject to federal income tax. The IRS requires 20% withholding on a lump sum or on installments expected to last less than 10 years, and a payment before age 59 1/2 that is not rolled over may add a 10% IRS tax. A direct rollover (except to a Roth IRA) keeps taxes deferred. DRS Washington TRS Plan 3 page, How is my withdrawal taxed?
What the sources say
- Most or all of your pension is subject to federal income tax. DRS withholds as if you're single with no adjustments unless you file a W-4P, and it sends a 1099-R each year.DRS Washington TRS Plan 2 page, Federal taxes on your benefit
- State law exempts Washington TRS pensions from 'any state, county, municipal or other local tax'. DRS doesn't withhold any state tax from pension payments, wherever you live.RCW 41.32.052(1); DRS Washington TRS Plan 3 page, Pension benefit (employer contributions)
Questions
Is my Washington TRS pension taxed?
Most or all of it is subject to federal income tax. DRS withholds as if you're single with no adjustments unless you file a W-4P, and sends a 1099-R each year.
What about state tax?
State law exempts Washington TRS pensions from "any state, county, municipal or other local tax", and DRS doesn't withhold state tax wherever you live. Our sources don't say how other states tax a Washington pension if you move.
Is there a penalty for early withdrawals?
Cashing out tax-deferred contributions early (before 55 for a Plan 1 withdrawal at retirement, or before 59½ for the Plan 3 investment account) may add a 10% IRS tax.
Source: DRS plan pages for Washington TRS Plan 1, Plan 2 and Plan 3 (the DRS member handbook is now published as these web pages), retrieved Nov. 11, 2026, DRS plan pages (Plan 2, Plan 3); TRS23RAPP (11/2022) p. 7; TRS1RAPP (11/2022) p. 3; RCW 41.32.052. Last reviewed .