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Federal Withholding and Your Pension

Getting hit every year with a larger than expected federal tax bill? Or maybe you received a hefty refund. Either way, it might be time to look at how much federal tax withholding is taken out of your NYSLRS pension. If you’re not sure whether you need to adjust your federal withholding, you can check with your tax preparer. Remember, this is only for federal income tax. New York State doesn’t tax your NYSLRS pension and we can’t withhold state income taxes.

Understanding Your Federal Withholding

You can adjust the amount we withhold from your retirement benefit at any time. Just follow these step-by-step instructions.

  1. Print our NYSLRS 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 you print it out.)
  2. Fill in the top of the form with your name, address, Social Security number and NYSLRS ID.
  3. Complete the form.
    • Select your filing status.
    • If you have income from a job or more than one pension/annuity, in addition to your NYSLRS pension, or if you’re married filing jointly and your spouse receives income from a job or pension/annuity, you can enter that in Step 2.
    • If you need to claim dependents, you can enter that information in Step 3.
    • If you have other adjustments to make — other income, deductions or extra withholding — you can complete Step 4.
  4. If you completed the form by typing in your information, print the form.
  5. Date and sign the form.
  6. Mail your form to:
    NYSLRS
    110 State Street
    Albany, NY 12244-0001

You can sign in to Retirement Online to view your current federal withholding information, including your withholding status, number of exemptions and any additional tax being withheld. You’ll also find your NYSLRS ID on your Retirement Online account page. Visit our Taxes and Your Pension page for more information.

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.

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.

Visit our Taxes and Your Pension page for more information.