Changing Your Tax Withholding

If I do not elect a tax withholding preference, how will taxes be withheld from my monthly benefit payment?

If you do not elect a tax withholding preference, MPERS will still withhold federal and state taxes based on the following:

• Non-Rollover Eligible Distributions: Federal withholding will be single with no adjustments.
• Eligible Rollover Distributions: Federal withholding will be 20%. MPERS does not automatically withhold Missouri state tax. You must complete a MO W-4P Withholding Certificate for Pension or Annuity Statements should you want Missouri state taxes withheld from your benefit payment.

Generally, the method and rate of withholding depends on whether:

• The payment is rollover eligible.
• The payment is delivered outside the U.S.
• You are a nonresident alien individual, a nonresident alien beneficiary, or a foreign estate.

Special withholding rules apply to payments outside the U.S. and payments to a foreign person.

Your tax withholding options also depend on your benefit type and whether the payment is eligible for rollover distribution.

If you are receiving a monthly benefit that is not eligible for rollover distribution, you may elect one or more of the following options:

• No federal tax withholding.
• Withholding federal income tax based on the tax table.
• An additional amount withheld from each benefit payment.

If you receive a distribution that is eligible for rollover but you do not roll it over directly to another qualified retirement plan or IRA, your payment is taxable.

The federal tax rate for an eligible rollover distribution is 20%. MPERS is required to withhold the 20%. You cannot opt out of federal tax withholding for eligible rollover distributions. MPERS will not withhold the 20% federal income tax for rollover eligible distributions transferred directly to an IRA or other qualified plan.

Caution: There are penalties for not paying enough federal tax during the year either through withholding or estimated tax payments. See IRS Publication 505, Tax Withholding and Estimated Tax, at IRS.gov for more information.

If I reside outside Missouri, what is my tax withholding option?

If you do not live in Missouri but are required to file a Missouri state tax return, you may request MPERS to withhold Missouri state income taxes.

I receive two different benefits each month. Can I withhold taxes differently on each one?

If you receive different types of monthly payments from MPERS, you may elect a different tax withholding amount for each type of payment.

If you are registered on myMPERS, you may make these elections online.

You may also complete a separate Withholding Certificate for Pension or Annuity Payments forms for each payment type and send it to MPERS.

How are lump-sum distributions taxed?

Lump-sum distributions, including a refund of employee contributions, are subject to special tax provisions.

For more information on these rules, see the MPERS publication, Special Tax Notice for Lump Sum Distributions.

To calculate the amount of tax withholding, use IRS Form W-4P, Withholding Certificate for Pension or Annuity Payments, available at IRS.gov.

If you are registered on myMPERS, you can estimate your tax withholding online.

I made an election to have my taxes withheld based on the tax tables. Why are no taxes being withheld from my benefit payment?

If you elect to have tax withholding based on the tax table, you might not have any taxes withheld from your monthly benefit. This will occur in cases where the monthly taxable allowance is below the minimum amount required for withholding based upon the tax table you have elected.