Q: Why is there a change to the pension amount in July?
A: Every July beginning the calendar year after your retirement, you receive your post retirement increase of 2.5% of your original pension. As result, your pension will increase as well as your federal tax withholding.
Q: How do I change my federal tax withholding?
A: You may download the W-4P Form from our website at http://ers.ehawaii.gov or contact our office and we will mail you the form.
Q: Does the ERS send any notice when there is change to my pension?
A: Yes. The ERS sends a statement or letter explaining the change to your pension prior to the effective date of change. We encourage you to wait for the statement and check your bank statement before contacting the ERS.
Q: When will I receive my tax reporting documents (1099R)?
A: If you received benefits from the ERS during the previous year, your Internal Revenue Service (IRS) Form 1099-R will be mailed to your home address by January 31. Reprint/duplicate Form 1099-R requests may be requested approximately 2 weeks later to allow time for mail delivery. If you have a professional tax advisor, accountant, and/or tax preparer, we suggest that you make this information available for their review.
The 1099-R is a four-part form with instructions on the back of the form. Copy B is to be used in preparing your federal return. Retain Copy C for your records and keep it in a safe place for future financial purposes. You may disregard Copy 2, since all benefits received from the ERS are exempt from State of Hawaii income tax. If you are living out-of-state, you should consult a qualified tax preparer regarding the tax laws in your area.
Your IRS Form 1099-R will include the following information:
Box 1- Gross distribution: Total benefit payment(s) ERS paid to you in calendar year 2011 per IRS Distribution Code (in Box 7)
Box 2a – Taxable amount: The taxable portion of your benefit payment(s) on this 1099-R.
Box 4 – Federal income tax withheld: The amount of federal income tax ERS withheld from your benefit payment(s), if any, during calendar year.
Box 5 – Employee contributions /Designated Roth contributions or insurance premiums: The portion of your gross benefit payment(s) not subject to taxes and the difference between Box 1 and Box 2a. This is the amount of after-tax contributions that the IRS allows you to recover tax free for the year.
Box 7 – Distribution code(s): Denotes the type of payment you received. IRS uses this code to determine the proper tax treatment of your benefit payments.
Account Number: A unique number for each ERS 1099-R that helps identify duplicate forms if you request a reprint.
Q: How is my retirement benefits classified for income tax reporting (i.e. IRA, pension or annuity)?
A: The ERS is a ‘government defined benefit pension plan’. All benefits paid by ERS and reported to you on Form 1099-R are ‘pension’ benefits. For terminated members this includes refund of contributions and for retirees this includes option refund payments and disability benefits.
Q: How many Form 1099-Rs will I receive?
A: Most will receive only one Form 1099-R. You may receive several different 1099-R forms if you:
(1) took a refund option with a rollover to another retirement account;
(2) turned age 59 1/2 during calendar year or
(3) received benefits as a retiree and a beneficiary