Tag Archives: withdrawing contributions

tax

Taxes and Your NYSLRS Pension

Tax season is here again.

In late January, NYSLRS mailed tax information to retirees (and some members and beneficiaries) so they can file their taxes.

1099-Rs

NYSLRS pensions are not subject to New York State or local income taxes, but in most cases they are subject to federal taxes. In January, we mailed 1099-R tax forms to almost 500,000 retirees who receive taxable benefits. We also mailed 1099-Rs to beneficiaries who received taxable income from NYSLRS in 2019, members who have taken taxable NYSLRS loans or have defaulted on their loans, and those who ended their membership and withdrew their contributions in 2019.

tax info - 1099-R tutorial

A 1099-R 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.

If you didn’t get your 1099-R, you can request a reprint. This year, reprints will be available for calendar years 2017, 2018 and 2019. Your 1099-R will be mailed to the address we have on file for you. Sign in to Retirement Online to check or update your mailing address before requesting a reprint.

If you have questions about the information on the form, we feature an interactive 1099-R tutorial 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

If you need to make changes to your federal withholding, you can send us a W-4P form at any time. You can use this form to change your withholding status, increase or decrease the number of your exemptions, or request that an additional amount be withheld.

You can use our federal tax withholding calculator to see how these changes would affect your withholding.

Please note: If you change your withholding, it may take a few months before the changes are reflected in your pension payments. You can look up your current payment breakdown, including tax withholding, using Retirement Online.

What If I Leave Public Employment?

Most of us will change jobs over our lifetimes, and some of us will leave public employment before retirement. But if you leave the public workforce, what will become of your NYSLRS retirement benefits?

leave public employment

NYSLRS has published a booklet to provide guidance in that situation. What If I Leave Public Employment? outlines what happens with your benefits and details your rights and responsibilities. If you recently left public employment or plan to leave in the future, here are some key points the publication can help you understand.

If You Leave Public Employment, Will You Still Get a Pension?

If you’re vested, you can still collect a NYSLRS pension when you reach retirement age. Members in Tiers 1 – 4 become vested after five years of service; members in Tiers 5 and 6 become vested after ten years. Most members can apply for a pension as early as age 55, but their pension may be reduced if they take it before full retirement age (62 or 63).

What if You End Your Membership?

If you’re not vested, you can end your membership and get a refund of your contribution balance, which includes accumulated interest. After you have been off the public payroll for 15 days, you can request a refund by filing a withdrawal application.

If you don’t withdraw your contributions, they will continue to earn 5 percent interest for seven years. If you’re still off the public payroll after seven years, your membership will automatically end. Your contributions will be deposited into a non-interest account but will not be refunded to you automatically. You must file a withdrawal application to receive them.

If you end your membership, you will no longer be eligible for any NYSLRS benefits. There may also be tax consequences to withdrawing your contributions.

What are Your Responsibilities?

If you leave public employment, but remain a member, it’s your responsibility to notify us of any address changes. You will also need to keep your beneficiary information current.

More Information

Please read What If I Leave Public Employment? to get the full story on leaving public employment. We’ll also be featuring other publications in future blogs, including:

NYSLRS Basics: Member Contributions

As a NYSLRS member, you may be making or have made contributions as part of your membership. When you make contributions, a percentage of your salary joins a pool of money called the Common Retirement Fund (the Fund). The Fund is also made up of employer contributions and investment income. By investing contributions, the Fund helps to meet its obligation of paying out benefits to past, present and future retirees.

What this means for you is that you, and other members like you, are all doing your part to fund your future retirement.

Types of Member Contributions

If you belong to a contributory retirement plan, you make required contributions. This means you must make contributions for the length of time listed in your retirement plan. Some members may contribute for only part or all their public service careers. If you belong to a non-contributory plan, this means you aren’t required to make contributions. Instead, you could make voluntary contributions over the course of your career, if your plan allows it. This would provide you with an annuity in addition to your pension when you retire.

(Check out the “Contributing Toward Your Retirement” section in your specific retirement plan publication to see what contributions you make.)

contributions-ers-pfrs-tiers-3-6

Withdrawing Your Member Contributions

What happens to your contributions if you leave public employment? One option is to take your contributions with you. If you have less than ten years of service credit or aren’t vested, you can withdraw your contributions plus the interest they’ve earned. However, withdrawing your contributions also terminates your membership with NYSLRS. Once your membership ends, you won’t be eligible for a retirement benefit.

Another option is to leave your contributions where they are. After all, if you leave public employment, there’s a chance you may return as well. If you do, then your contributions will be waiting for you when you rejoin NYSLRS. If you don’t return to public service, aren’t vested, and have been off the public payroll for seven years, by law we must terminate your membership. Any contributions left will stop accruing interest.

If you have ten or more years of service credit, you can’t withdraw your contributions from NYSLRS. In that situation, if you’re vested before you leave public employment, you can apply for a retirement benefit at a later date (age 55 for most members).

(Read our publication “What If I Leave Public Employment?” for more information, particularly the taxability of withdrawing your contributions.)

If you have questions, visit our website to learn more about member contributions. Want to read more NYSLRS Basics? Check out our earlier posts on: