Guide to Your SERS-Issued 1099-R Tax Form

Guide to Your SERS-Issued 1099-R Tax Form
Because SERS made at least one payment to you in 2013, we are required to provide you and the IRS with a
1099-R form. This guide explains the information on the form and helps you understand if you should expect
to receive more than one 1099-R before filing your 2013 income tax return.
Depending on the number, type, and timing of the payments you received from SERS, you may
receive more than one 1099-R form. You could receive more than one 1099-R from SERS if:
• you retired last year and chose to withdraw any of your
contributions and interest in a lump sum,
• you received a payment from your own SERS pension
and also received a survivor or beneficiary payment from
a deceased SERS member’s pension, or
• you turned 59½ last year.
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A Map to Your 1099-R
Box 7 - Dist. code shows the type of payment
you received. if you received more than one
type of payment, you will receive more than one
1099-R form from SeRS and each will have a
different code in this box. the following codes
apply to SeRS payments:
1 - early distribution, no known exception
(in most cases, under age 59½) indicates
lump-sum payments you received before
age 59½ that were not rolled into another
qualified retirement plan.
Box 1 - Gross distribution shows the total
amount paid to you before taxes were calculated
and deducted. in most cases, this is the amount
you report on your 1040 or 1040-A tax form on
the line for “iRa distributions,” “pensions and
annuities,” or “taxable amount” (whichever
applies). if the amount was paid to you as a
lump-sum distribution, see Form 4972, Tax
on Lump-Sum Distributions for additional
instruction.
Box 2a - Taxable amount shows the taxable
amount paid to you. a portion of the total amount
paid to you may not be taxable, so the amount in
box 1 may be different from the amount in box
2a. if there is any difference, it will be shown in
box 5.
Box 2b - Taxable amount not determined, if
marked with a check mark, indicates that SeRS
does not have enough information to determine
how much of the total paid to you is taxable and
box 2a should be blank. if this box is checked,
contact the iRS or a professional tax adviser for
assistance.
Box 2b - Total distribution, if marked with a
check mark, indicates that the 2013 payment
closed the SeRS account. this could occur if:
• you left employment, were not entitled
to an annuity, and withdrew all of your
contributions and interest in 2013,
2 - early distribution, exception applies
(under age 59½) indicates monthly annuity
payments you received before the age of
59½ and to lump-sum payments that were
not rolled into another qualified retirement
plan if you left employment between the
year you turned 55 and the year you turned
59½.
• you left employment, withdrew all of your
contributions in installments, and received
your final installment payment in 2013, or
• you received a lump-sum payment in
2013 as a beneficiary of a deceased
SeRS member.
3 – disability
4 – death
7 – normal distribution indicates payments
made after you turned 59½.
g – direct rollover of a distribution
to a qualified plan, a governmental
section 457(b) plan or an iRa indicates
payments rolled directly into another
qualified retirement plan, such as the
commonwealth’s deferred Compensation
program.
The Unique control number is a seven-digit
number that identifies a specific 1099-R form.
The first digit indicates how many 1099-R forms
you will receive from SeRS for 2013.
Box 4 - Federal income tax withheld shows
the amount of federal income tax withheld from
the amount in box 1. enter this amount on your
tax return as “tax withheld.”
Box 9a - Your total dist. will be blank if the
payment was rolled into another qualified
retirement plan. if, however, a payment you
received was part of the total distribution of a
pension account made to more than one person,
your percentage of the distribution is shown
here.
Box 9b - Total employee contributions, if you received your first annuity payment last year, shows the
amount of contributions you paid toward your SeRS pension, if any, that are not subject to federal income tax.
This box only applies if you received your first annuity payment in 2013.
Box 5 - Employee contributions shows the
amount of previously taxed money you paid (or
in the case of survivor or beneficiary payments,
the amount the deceased SeRS member paid)
toward your pension, if any, that was returned to
you tax-free in 2013, as part of the distribution
or annuity payments you received. these
employee contributions are also referred to as
“after-tax contributions.”
For advice on taxes or estate
planning, please see a professional
financial or tax adviser, or contact the
iRS at www.irs.gov or
1-800-829-1040.
In general, SERS pension
payments are:
subject to federal income tax. Two key
exceptions include: payments made to return
employee contributions that you made toward
your pension prior to 1982, and payments made
to return employee contributions you made when
purchasing prior creditable service.
exempt from PA state and local income taxes.
If you live in PA, your SERS payments are exempt
from PA state and local income taxes. As such, we
do not provide 1099-R forms to any state or local
tax authority.
Special notes for those who:
live outside PA. While SERS payments are exempt
from PA state and local taxes, they may be subject
to state and local income taxes where you live. If so,
you will be required to file Copy 2 of your 1099-R
form with your state and/or local tax office. Contact
your state and local tax offices, or a qualified tax
professional for more information. If you live outside
the United States, you are responsible for learning
about and adhering to any income tax obligations
you may have to non-U.S. taxing authorities.
receive SERS disability retirement payments.
Generally, when filing your federal income tax return,
you must report the taxable portion of your disability
retirement payments as “wages” on IRS forms 1040
or 1040-A until you reach the retirement system’s
normal retirement age. See IRS Publication 575,
Pension and Annuity Income for more information.
are not U.S. citizens. If you are not a U.S. citizen
(including resident alien) you should receive an IRS
1042-S form instead of a 1099-R. Please contact
SERS at 1-800-633-5461 if you receive a 1099-R
in error.
Several commercial tax preparation
programs automatically assess
PA state and local taxes on SERS
payments. In such cases, you
will need to manually change the
calculated amounts to avoid paying
more taxes than you actually owe.
Contact the manufacturer of the
particular tax preparation software
you use if you need assistance.
Contributions not subject
to federal income tax can
include:
“Pre-87 after-tax contributions,” if you did
not withdraw them in a lump sum at retirement, are
previously taxed payroll contributions made toward
your pension prior to January 1, 1982 as well as
payments to purchase service credit made prior to
January 1, 1987.
“Post-86 after-tax contributions” are
payments to purchase service credit made on or
after January 1, 1987.
See IRS Publication 575 to learn how contributions
you paid tax on can be returned to you without
being taxed again. Until all non-taxable money
is returned to you, a portion of your benefit is paid
to you tax-free each year. After all of your
after-tax contributions are returned to you, your
gross distribution and your taxable amounts will
be the same.
Need Help?
To ask questions about your SERS pension, call your retirement counselor at 1-800-633-5461 or
visit www.SERS.state.pa.us.
To get federal tax forms or help with those forms, contact the IRS at 1-800-829-1040 or visit www.IRS.gov.
To learn more about taxes or estate planning, contact a professional tax adviser.
1099-R Frequently Asked Questions
Can SERS provide tax advice? No. You can seek advice from a professional tax adviser or from the IRS
at 1-800-829-1040 or www.irs.gov. This information is general guidance only and does not cover all relevant
tax law.
How is federal income tax calculated on my SERS payments? There are several IRS-approved
methods of calculating the taxable and non-taxable portions of SERS benefits depending upon the date you
first began receiving payments and other factors. In most cases, we use the “simplified method” for annuity
payments that began after November 18, 1996. Under this method, previously taxed contributions made after
December 31, 1986, cannot be fully excluded from federal income tax in the year in which they are received.
Instead, they are excluded from federal income tax over a period equal to the expected number of payments,
based on your age at retirement.
If you were over age 75 when you retired, special rules apply. See IRS Publication 575, Pension and Annuity
Income, or Publication 939, General Rule for Pensions and Annuities for more information, specific to your
date of retirement.
Is there a tax penalty if I withdrew my contributions and interest at retirement, and had the
pretax portion sent directly to me? Yes, if you received a payment before age 59½ and you did not roll
the money into a qualified plan. In addition to the regular income tax, you will also pay tax equal to 10 percent
of the taxable portion of the withdrawal. There are exceptions. See IRS Publication 575 for information.
I think my 1099-R is incorrect – what should I do? Please write to SERS at the address on this
guide or send an e-mail to [email protected] Provide your daytime phone number and detail the information
you believe is incorrect. If necessary, we will issue a corrected 1099-R. If we determine that the original 1099-R
is correct, we will notify you and explain why.
How do I change how much I withhold from my payments for income tax purposes? You can
authorize SERS to start, stop, or change withholding by completing an Annuitant Federal Income Tax
Withholding (SERS-W-4P) form. The form is available at www.SERS.state.pa.us or call 1-800-633-5461 to
have one sent to you.
How can I get another copy of my 1099-R form? You can print duplicate forms for 1995 through 2013
from your Online Member Services account. If you haven’t already, please visit www.SERS.state.pa.us, click
on “Account Sign In” and create an account.
Free duplicate 1099-R forms are also available from SERS for tax years 1995 through 2013. Forms from
before 1995 cost $5 each. For assistance, call your retirement counseling center at 1-800-633-5461.
I use direct deposit. If I move, do I have to notify SERS of my new address?
Yes. Even though we don’t send you a check every month, we still need
to send important information like your 1099-R form, your Personal
Statement of Retirement Benefits, newsletters, benefit verification forms,
etc. If your address changes – even temporarily – complete an Annuitant
Change of Address (SERS-128) form. The form is available at
www.SERS.state.pa.us and by calling 1-800-633-5461.
LEARN MORE AT
SERS.STATE.PA.US
STATE EMPLOYEES’ RETIREMENT SYSTEM | 30 NORTH 3RD STREET, SUITE 150 | HARRISBURG PA 17101