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Jan 23, 2019, 8:57 AM By MOSERS
Will state pension still be tax exempt for 2018 pension?
If you are referring to the Public Pension Exemption, we are unaware of any changes to it compared to the previous year. This means that you may not have to pay Missouri state taxes on some or all of your MOSERS pension. See the Missouri State Tax Public Pension Exemption flyer. For more information about taxes, please contact the Missouri Department of Revenue or go to: www.dor.mo.gov/personal/ptc/pension.php.
Jan 23, 2019, 8:44 AM By MOSERS
We received two questions about 1099-Rs recently:
- When will 2018 1099-R be on-line?
- Why can I not receive/access my 1099R online? It would seem to me that it would save thousands of dollars.
You can access an electronic copy of your 1099-R after we have mailed it, which will be by the end of January. Simply log in through myMOSERS to your MOSERS Member Homepage and you will find it listed under Personal Information. Watch our website for more information.
We appreciate your comment indicating you would be ok getting it online only and that it would save money. We have taken that approach with our other publications and correspondence - based on individual member preference. The 1099-R is one document that we still make available to all retirees both in hard copy and online. The decision to do so is based on our experience with retiree preference and needs. However, we will certainly take your suggestion into consideration for future planning.
Dec 19, 2018, 10:02 AM By MOSERS
Your RetireeNews, Fall Winter 2017 states if a retiree lives in Missouri, then Missouri state income tax may be due on the pension. Does this imply that if a retiree is a resident of another state (even one without a state income tax) that the Missouri pension is not taxed by the State of Missouri?
Each person’s situation may be different and we cannot advise you on your tax liability as it pertains to your MOSERS pension. We suggest you contact the Missouri Department of Revenue and/or a qualified tax advisor about your tax liability.
MOSERS withholds state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit there. We will mail 1099-R tax forms to all retirees by January 31.
Oct 16, 2018, 3:31 PM By MOSERS
Is MOSERS a public or private pension?
MOSERS is a public defined benefit (DB) pension plan so the benefit you receive through MOSERS is considered a public pension. As long as you reside in Missouri, your retirement benefits are subject to Missouri state income tax and federal tax. You may also be interested in information we have posted in the Missouri state tax Public Pension Exemption flyer.
Aug 2, 2018, 3:57 PM By MOSERS
One of my coworkers informed me that state employees who are retirement eligible per the rule of 80 will be penalized if they are under the age of 55. I am not aware of any such penalty but wanted to ask.
No. There is no penalty or reduction to your MOSERS pension benefit if you meet both the age and service requirements for normal retirement eligibility before the age of 55. To be eligible to retire under the Rule of 80 in the MSEP and MSEP 2000, you must be at least age 48 and your age and years of service must equal 80 or more.
Taxes &/or penalties related to other distributions:
- There may be a 10% IRS tax penalty if you are younger than age 59 ½ at the time of payment, elect BackDROP*, and take a lump-sum cash payment. If you terminate employment in or after the year you reach age 55, this penalty will not apply. Additionally, MOSERS is required to withhold 20% of a BackDROP cash payment for federal taxes. More details are available in the Special Tax Notice brochure on our website. In such a situation, you can avoid the IRS tax penalty by rolling over the BackDROP payment to a qualified retirement account such as with MO Deferred Comp and not withdrawing it until you meet all IRS regulations (generally speaking, that is after you attain age 59 1/2 but there are exceptions, see page 4 of the Special Tax Notice brochure (BackDROP and Refunds), including one for public safety employees).
- If you have made pre-tax contributions to the MO Deferred Comp plan (an internal revenue code section 457(b) plan), distributions from that plan following retirement or termination of service at any age are subject to ordinary income tax only.
- Employer “match” contributions made on behalf of an employee to a 401(a) plan are subject to an additional 10% penalty if withdrawn prior to age 59 1/2.
Be sure to check with your financial institution or a tax advisor for information about your tax liability when you begin withdrawing your funds.
*BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.
May 14, 2018, 10:39 AM By MOSERS
Are Public Pension benefits taxable if the MOSER retiree now resides in a state other than Missouri? I understand Missouri does not tax MOSER pensions.
MOSERS withholds state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit. Pension benefits are subject to federal taxes.
May 9, 2018, 9:14 AM By MOSERS
If MOSERS benefit is a “public” pension and, therefore, is not considered a salary or wage why would I have to pay taxes on the backdrop? Isn't the backdrop considered part of an employee's pension?
Your MOSERS benefit is a public pension and, therefore, is not considered a salary or wage. It does not count towards the annual earnings limit for social security. Your BackDROP payment, however, is considered taxable income for the year in which you receive the payment unless you roll it over to a traditional IRA or another eligible employer plan, such as MO Deferred Comp. Depending upon your age, there could also be an additional 10% IRS penalty if you choose the cash payment.
When you retire with MOSERS, you will be asked if you want to elect BackDROP* (if eligible), and, if so, how you want to receive that distribution: cash option, rollover option, or combination cash and rollover option. State employees eligible to receive a lump-sum BackDROP payment get this payment in addition to a lifetime monthly benefit payment and can choose to roll the lump sum into the MO Deferred Comp Plan at retirement. This option is available to all state of Missouri employees, even if they have never participated in the deferred compensation plan. A popular reason to roll the lump-sum payment into the deferred compensation plan is that it allows employees to defer taxes on the payment until those assets are distributed in retirement. There is a helpful publication on MO Deferred Comp’s website called Thinking About the BackDROP?
We suggest you speak to a tax professional or financial advisor for advice specific to your situation and to discuss all of your options at retirement. For more information about Social Security, the Social Security Administration website is www.ssa.gov or call them toll-free at (800) 772-1213.
Feb 15, 2018, 1:30 AM By MOSERS
A friend under tier 2011 wants to know if their 4% contribution towards retirement is eligible for the federal saver's tax credit. Some places on the web seem to call the employee contribution a 457 (deferred comp) plan. No where else is it referred to by any plan name (IRA, 403B, 401K) that would clarify what it is. To make it more confusing, the contribution is in box 14 of their W-2 with code EE after it. If it was in box 12, code EE would mean it was a 457 plan and would be saver's credit eligible, but there is no definition of what this means in box 14. Did they make a mistake?
No, the 4% employee contributions made by members of the MSEP 2011 or the Judicial Plan 2011 to MOSERS do not qualify for the retirement Savers Credit because these contributions are mandatory contributions. The MOSERS defined benefit plan is classified as a qualified retirement plan. However, only voluntary contributions to a qualified retirement plan are eligible for the retirement savers credit. The 4% contributions are made on a pre-tax basis and used to help pay the cost of future retirement benefits. On the W-2 form, contributions to the MOSERS defined benefit plan should be listed in Box 14, but there are no standard codes to indicate the type of contribution. It is optional for the employer to report these contributions on the W-2.
The MO Deferred Comp Plan is a voluntary governmental 457(b) plan designed to help employees save additional income to supplement their defined benefit pension and social security benefits in retirement. The deferred compensation plan provides a convenient way to save extra money for retirement through payroll deduction. Voluntary contributions to MO Deferred Comp, or another governmental 457(b) plan, are eligible for the Saver’s Credit. Keep in mind, the credit is for low- to moderate-income taxpayers and calculated using their adjusted gross income (AGI) and filing status. Learn more about the Saver’s Credit on the IRS website. On the W-2 form, contributions to MO Deferred Comp, a 457(b) plan, are listed in Box 12. A code of G indicates a 457(b) plan and a code of EE indicates designated Roth contributions under a governmental section 457(b) plan.
Please see the instructions for IRS Form 8880 for more information concerning this credit.
Feb 5, 2018, 4:12 PM By MOSERS
Tax reform, how does this impact a retiree benefit? Have you changed the calculators to match the appropriate tax brackets as they will be now?
The tax reform bill that was recently passed appears to change some federal income tax brackets (the rates/percentage), including the income level ranges that fall within the brackets. Pensions continue to be considered taxable income at the federal level (unless contributions were made after-tax), so we suggest you discuss whether the federal tax changes will affect you with your tax professional.
Changes (if any) to the amount of your MOSERS benefit payment will be implemented beginning with your February payment (issued on February 28, 2018).
To the best of our knowledge, state taxation of Missouri public pensions won’t be affected by this bill. As a reminder, we included an article in our winter issue of RetireeNews about the Missouri public pension exemption.
You should have received your 1099-R tax form with information you will need to file your tax returns for 2017. If you prefer an electronic copy of your 1099-R or if you find you need a replacement copy of it simply log in to your myMOSERS and you will find it listed under Personal Information.
Yes – we have updated the Federal Tax Calculator on the Taxes page of our website. If you decide you want to change either your state or federal tax deductions from your monthly pension benefit, you may do so at any time. Simply submit a new Substitute W-4P form available on the Library page of our website for you to print and mail in, or log in to myMOSERS and submit this form electronically.
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We strive to provide the most accurate information possible in our answers to Rumor Central questions. However, occasionally, laws, policies or provisions change and individual circumstances may vary. Please contact a MOSERS benefit counselor or see the handbooks in our website Library for more detailed information. If there is any difference between the information provided in this blog or on the MOSERS website and the law or policies that govern MOSERS, the law and policies will prevail. See our Privacy, Security & Legal Notices for more information.