Transcript TMRS and the IRS How taxes are applied to TMRS Benefits

How Taxes Are Applied to
TMRS Benefits
2007 Annual Training Seminar
2007, Texas Municipal Retirement System.
Taxes Are Applied to Income:
 Refunds
 PLSDs
 Rollovers
(tax-deferred)
 Monthly
retirement
benefits
TMRS is a Qualified, Tax-Deferred
Governmental Retirement System
 What does “qualified”
mean?
 Tax-deferred —
NOT TAX FREE.
 What does “Employer
pick-up” mean?
How Are Income Taxes Handled in
Retirement?
 Pre-1984
 Post-1983 — non-payroll
contributions, interest,
and employer funds
 Retiree is in control
Refunds and Partial Lump Sum
Distributions (PLSDs)
 There is tax liability if you
don’t roll over
 Trustee-to-trustee
rollovers
 Rollovers to 457 accounts
— you don’t lose the tax
liability
Rollovers into TMRS
 When can TMRS accept a
rollover?
 Where can the money come
from?
Taxable Status
of Disability Retirement
 Why won’t TMRS code a retiree’s
1099R so the IRS treats it as a
disability retirement for tax purposes?
 The elusive
“code 3” issue!
Tax Saver Credit
 What is it?
 How does this help me?
Supplemental Death Benefits
 Is the supplemental death
benefit taxable?
 Does the value of this
fringe benefit have to be
reported as taxable
wages to an employee
while they are working?
Pension Protection Act of 2006
 Made permanent retirement plan changes
enacted in 2001 that were set to expire after 2010.
 Made major changes to funding rules for single
and multiemployer plans (not public plans).
 Liberalized retirement
plan distribution and
rollover rules.
 Clarified the application
of age discrimination
rules on hybrid
retirement plans.
HELPS Provision
 TMRS begins participating in the program in
January 2008.
 Retired public safety officers may pay for their
health insurance coverage from their monthly
retirement annuity.
TMRS makes direct
payment to health
insurance provider from
retiree’s annuity.
Up to $3,000 of the
payment may be deducted
on the retired officer’s tax
return per year.
HELPS Provision (cont.)
 Retirees who were public safety
officers – law enforcement,
firefighter, or EMS – are eligible.
 Retiree’s employing city must
verify status as a retired public
safety employee.
 Call TMRS if you need more
information or to request the
HELPS forms.
Questions & Answers
HOW TO CONTACT TMRS:
Toll-free: 800-924-8677
Web: www.TMRS.com
E-mail: [email protected]