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 select a tax withholding preference, MPERS will still withhold applicable federal and state taxes as described below.

• Non-rollover eligible distributions: Federal income tax is withheld using a single filing status with no adjustments.
• Eligible rollover distributions: Federal income tax is withheld at a flat rate of 20%.
  Missouri state income tax is not automatically withheld.
  To request Missouri state tax withholding, you must complete and submit Missouri Form W-4P, Withholding Certificate for Pension or Annuity Payments (PDF) .

What are my options for federal and state tax withholding?

In general, the method and rate of tax withholding depend on several factors, including whether:

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

Special withholding rules apply to payments made outside the United States and to payments made to foreign persons.

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

If you receive a monthly benefit that is not eligible for rollover, you may choose one or more of the following federal withholding options:

• No federal income tax withholding
• Federal income tax withholding based on IRS tax tables
• An additional amount withheld from each benefit payment

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

Federal income tax for eligible rollover distributions is withheld at a mandatory rate of 20%. MPERS is required to withhold this amount, and you cannot opt out of federal withholding for eligible rollover distributions.

MPERS will not withhold the 20% federal income tax if the rollover-eligible distribution is transferred directly to an IRA or another qualified retirement plan.

Caution: You may be subject to penalties if you do not pay enough federal tax during the year through withholding or estimated tax payments. For more information, see IRS Publication 505, Tax Withholding and Estimated Tax (PDF) on IRS.gov.

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

If you live outside Missouri but are required to file a Missouri state income tax return, you may request that MPERS withhold Missouri state income tax from your benefit payment.

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

Yes. If you receive more than one type of monthly payment from MPERS, you may elect a different tax withholding amount for each payment type.

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 (Form W-4P) (PDF) for each payment type and submit it to MPERS.

How are lump-sum distributions taxed?

Lump-sum distributions, including refunds of employee contributions, are subject to special federal tax rules.

For more information, see the MPERS publication Special Tax Notice for Lump-Sum Distributions (PDF) .

How do I calculate the amount of tax withholding?

To calculate your federal tax withholding, use IRS Form W-4P, Withholding Certificate for Pension or Annuity Payments (PDF) , available on IRS.gov.

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

I elected tax withholding based on the tax tables. Why are no taxes being withheld from my benefit payment?

If you elect tax withholding based on IRS tax tables, it is possible that no federal income tax will be withheld from your monthly benefit payment.

This occurs when your monthly taxable benefit amount is below the minimum threshold required for withholding under the tax table you selected.