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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.

Taxes and Your NYSLRS Retirement Benefit

Your NYSLRS retirement benefit isn’t subject to New York State or local taxes, but it is subject to federal income tax. Before you retire, take some time to think about how taxes could affect your retirement planning.

Will Your Pension Get Taxed in Another State?

While New York State won’t tax your NYSLRS retirement benefit, other states might. If you’re thinking of moving after retirement, you’ll need to consider the tax laws of the state you move to. The Retired Public Employees Association keeps a list of which states tax pension income on their website. And remember, if you do move, we’ll need your updated mailing address for our records.

Federal Tax Withholding Status for Your Pension

taxesAfter you’ve filed for retirement, we’ll reply back to you with a confirmation letter and some forms. One of these forms will be a W-4P form (Withholding Certificate for Pension or Annuity Payments). You’ll need to fill out this form to choose the amount you want withheld from your benefit each month for federal taxes. You can choose the withholding tax status that suits you, and you can change it any time afterward by completing a new W-4P form.

If you’re not sure how much you’ll need withheld for federal taxes, consider meeting with a tax professional to assist you before submitting the form. We also offer a federal tax withholding calculator on our website to help you plan.

Getting Your 1099-R

Once you start receiving your pension benefit, we’ll send you a 1099-R form for federal income tax filing purposes. A 1099-R form lists the distributions you’ll receive from your NYSLRS pension. We mail 1099-Rs out each year by January 31, so make sure we have your correct mailing address on file. This is especially important if you plan on moving in retirement.

We also feature an interactive 1099-R tutorial on our website. It can be a helpful tool to look at the first time you receive your 1099-R.

For more about taxes and your pension, please read our Tax Information About Your Pension FAQs.

NYSLRS Tax Overview

Tax season is ramping up, so it’s a good time to talk about the tax information related to your NYSLRS pension benefit.

1099-Rs

NYSLRS retirees and beneficiaries who receive a taxable benefit from NYSLRS are sent a 1099-R form each year. Certain NYSLRS members may also receive a 1099-R tax form if, for example, you borrow a taxable NYSLRS loan, default on a NYSLRS loan, or if you end your membership and withdraw your contributions. The 1099-R is a statement that shows:

  • The total benefit paid to you in a calendar year.
  • The taxable amount of your benefit.
  • The amount of taxes withheld from your benefit.

We mail out all 1099-R forms — more than 500,000 — by January 31, so if you haven’t already received your form, be sure to check your mail over the next few days.

If you lose your 1099-R, you can request a reprint from us starting the second week of February. Once reprints are available, we’ll process requests each night and mail them out the next day. This year, reprints will be available for calendar years 2013, 2014, and 2015.

1099-R Interactive Tutorial

1099-r tax form tutorial screenshot

Understanding your 1099-R Tutorial

We feature an interactive tutorial about the 1099-R form on our website. It walks you through a sample 1099-R, and offers a short explanation of specific boxes on the form.

Changing Your Federal Tax Withholdings

Your NYSLRS pension benefit is subject to federal taxes. You can change your federal tax withholding status at any time by sending us a W-4P form. (A handy tutorial about the W-4P form that walks you through the steps on filling it out is available on our website.)

W4-P Tax form tutorial screenshot

Understanding your W-4P Form Tutorial

We also offer a federal tax withholding calculator on our website to help you estimate how much should be withheld.

If you have other tax-related questions about your benefit, please visit our Tax FAQs.