Tag Archives: federal income tax

Federal Withholding and Your Pension

Federal Withholding and your PensionGetting hit every year with a big federal tax bill? You may want to increase the federal withholding from your NYSLRS pension. Or maybe you’re getting a big tax refund every year. If you have too much withheld, you’re basically giving the government an interest-free loan. But whatever your situation, you can adjust the amount we withhold from your retirement benefit at any time. Just follow these Step-By-Step instructions.

  1. Print a Form W-4P (Withholding Certificate for Pension or Annuity Payments) from our website. (This is a fillable form, so you can type in the information before your print it out.)
  2. Fill in the top of the form with your name, address, last four digits of your Social Security number and Registration number (if known).
  3. Complete one of the three numbered sections. (Do not complete more than one section.)
    • Complete Section 1 if you do not wish to have any federal income tax withheld.
    • Complete Section 2 if you want us to figure how much to withhold, based on your marital status and number of federal exemptions. You can also have an additional amount withheld.
    • Complete Section 3 if you know how much you want withheld. Remember, the amount you should include here is the total amount you want withheld from your pension, not the amount you want to add or subtract from your current withholding.
  4. Print the completed form.
  5. Date and sign the form.
  6. Mail or fax your form to NYSLRS. Our address and fax number are at the top of the W-4P form.

To find out how much we would withhold from your NYSLRS pension benefit based on your marital status and number of exemptions (if you’re completing Section 2 of the W-4P form), you can use our Federal Tax Withholding Calculator. You can also visit our website for other resources and more information about Taxes and Your Pension.

NYSLRS’ Partial Lump Sum Payments

When you retire, you’ll choose a payment option for your monthly lifetime benefit. Eligible NYSLRS members may also choose to receive a partial lump sum payment. The payment, which you’ll receive when we finish calculating your pension benefit, is a percentage of the actuarial value of your retirement benefit at the time you retire. By accepting this one-time lump sum payment, your lifetime monthly benefit will be permanently reduced.

Who is Eligible for the Partial Lump Sum Payment?

If you’re a Police and Fire Retirement System (PFRS) member covered by a special 20- or 25-year plan, you may be eligible to choose this payment. Certain Employees’ Retirement System (ERS) members (sheriffs, undersheriffs, deputy sheriffs, and county correction officers) are eligible if their employer offers this benefit. (Read the other eligibility requirements for PFRS members and ERS members.)

Partial Lump Sum PaymentsHow the Partial Lump Sum Payment Works

The percentage amounts you can choose from depend on how long you’ve been eligible to retire. You can choose a lump sum payment that equals 5, 10, 15, 20 or 25 percent of the value of your retirement benefit.

The payment can be made directly to you, or you can also have it paid in a direct rollover to an Individual Retirement Annuity or other plan that accepts rollovers. Before you decide, you may want to speak with a tax advisor to see if the partial lump sum payment is right for you. Certain partial lump sum distributions could be subject to federal income tax.

How Do I Choose the Partial Lump Sum?

If you’re eligible for the partial lump sum, we’ll send you a special option election form when you file for retirement. You can use this form to choose both the partial lump sum and the payment option you want for your continuing lifetime monthly benefit.

Please read Partial Lump Sum (PLS) Payment at Retirement – For Eligible Retirement System Members for more information.