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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.

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How Taxes Are Applied to TMRS Benefits

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  1. How Taxes Are Applied to TMRS Benefits 2007 Annual Training Seminar 2007, Texas Municipal Retirement System.

  2. Taxes Are Applied to Income: • Refunds • PLSDs • Rollovers(tax-deferred) • Monthly retirement benefits

  3. TMRS is a Qualified, Tax-Deferred Governmental Retirement System • What does “qualified” mean? • Tax-deferred — NOT TAX FREE. • What does “Employer pick-up” mean?

  4. How Are Income Taxes Handled in Retirement? • Pre-1984 • Post-1983 — non-payroll contributions, interest, and employer funds • Retiree is in control

  5. 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

  6. Rollovers into TMRS • When can TMRS accept a rollover? • Where can the money come from?

  7. 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!

  8. Tax Saver Credit • What is it? • How does this help me?

  9. 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?

  10. 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.

  11. 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.

  12. 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.

  13. Questions & Answers HOW TO CONTACT TMRS: Toll-free: 800-924-8677 Web: www.TMRS.com E-mail: phonecenter@tmrs.com

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