Withholding Taxes from Your Benefit
Most contributions you have made to PEERS are taxable when returned to you in the form of benefit payments. However, if you made contributions to PEERS prior to July 1989, or made payments to reinstate or purchase service using already taxed dollars, those funds are exempt from additional tax when you receive them as part of your retirement benefit. If you have no previously-taxed funds in your account, your entire benefit is taxable.
Federal Income Tax
Unless you specifically ask us not to do so, we are required to withhold federal income tax from each benefit payment in excess of a specific amount set by the Internal Revenue Service (IRS) each year. If the taxable portion of your benefit is less than that amount, no tax is withheld unless you direct us to do so.
State Income Tax
If you live in Missouri, your PEERS benefits are subject to Missouri income tax, with the exception of certain amounts based on your Missouri filing status and adjusted gross income. Missouri income tax is not deducted from your benefit payment unless you direct us to do so. If you move out of state, your Missouri tax withholding automatically stops. If you live in a state other than Missouri, you should contact the taxing authority of that state for information on state income tax and your PEERS benefit.
Changing Your Tax Withholding
You can change your federal or Missouri tax withholding at any time using the Tax Withholding Authorization form. If you need tax advice, contact a tax professional, the IRS at (800) 829-1040 or the Missouri Department of Revenue at (573) 751-3505, or email firstname.lastname@example.org.
IRS Form 1099-R
As a benefit recipient, you receive an IRS Form 1099-R from PEERS each January showing the total benefit paid to you during the previous calendar year, the taxable portion of that benefit, and the amounts withheld. You will need this form when you prepare your income taxes. To view a history of your past 1099-R forms, log in to your online account.
For more information on income taxes and your benefits, view the Service Retirement section of your Member Handbook.