Guide to Your PSERS-Issued Form 1099-R

Guide to Your PSERS-Issued Form 1099-R

Frequently Asked Questions (FAQ):

Does PSERS provide tax advice? No. Please seek advice from a professional tax advisor or from the Internal Revenue Service (IRS) at .

Why did I receive more than one Form 1099-R? The IRS allocates distribution codes in Box 7 to identify the type of payments you received during the tax year. If you received more than one type of payment, PSERS must prepare a separate Form 1099-R for each distribution code.

I receive my pension through direct deposit to my financial institution. If I move do I have to notify PSERS of my new address? Yes. We need to send you important information such as this Form 1099-R. Please notify us of address changes as soon as possible. Please include your name, last four digits of your social security number, old and new addresses.

QUESTIONS? Contact PSERS at

1-888-773-7748 or:

PO Box 125 Harrisburg, PA

17108-0125 I believe that my PSERS issued Form 1099-R is incorrect. What should I do?

Please write to PSERS at the address on this guide; be sure to include your daytime telephone number, a

copy of your Form 1099-R and indicate the information that you believe to be incorrect. Upon our review

we will either issue a new Form 1099-R or will notify you that the original one is correct and explain why

it is correct.

How do I change my federal tax withholding? Please submit a new federal Form W4-P which is available at or at psers.state.pa.us.

How do I receive a total of Medical Deductions withheld during 2010? If you are able to itemize deductions, participate in the Health Options Program, and require information as to the amount of medical premiums deducted from your monthly annuity, please contact the Health Administration Unit at 1-800-773-7725.

Will I receive a summary of Premium Assistance benefits that I received in 2010? If you received Premium Assistance benefits during 2010, you will receive separate communication providing the amount.

Is my pension subject to Pennsylvania State and Local Income Tax? No. Monthly retirement benefit payments from PSERS are exempt from Pennsylvania state and local taxes. If you live outside of Pennsylvania, you should contact the tax bureau where you live for pension distribution tax rules in your state.

How do I receive additional copies of Form 1099-R? You can access your personal PSERS account information and print duplicates of your 2010 Form 1099R through the secure online retired member link on the PSERS website. For security reasons you will need to register on the site (if you have not done so). Visit psers.state.pa.us.

Why has my distribution code changed from a "7" (in prior years) to a "4" for 2010?

As a recipient of a survivor annuity monthly benefit, the IRS has indicated that the proper distribution code

is a "4." There are no adverse tax consequences.

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How to read your Form 1099-R:

Box 1 This is the total amount you received in 2010 for the distribution type shown in Box 7. The amount may have been received as periodic payments, as non-periodic payments, or as a total distribution. You may receive multiple 1099-R forms if you received more than one type of distribution.

Box 2a This is the taxable amount of your distribution. The taxable amount was calculated by reducing the Gross Amount (Box 1) by the amount of excludable after-tax employee contributions (also referred to as Investment in Contract), if any, for this tax year. See Box 5 for the amount of the excludable aftertax employee contributions.

Box 2b This box applies when the entire balance of an account is distributed.

Box 3 If you received a total distribution of a death benefit for a PSERS member whose date of birth was before January 2, 1936 and the member had PSERS service before 1974, you may be able to treat a portion of the death benefit distribution as capital gains. The amount, if any, shown in Box 3 may be eligible for capital gains treatment. Because of the age and service requirements, the capital gains calculation will only apply to a very small number of distributions and the capital gains treatment is optional in those cases. Additional information is available on the instructions for IRS Form 4972.

Box 4 This is the amount of federal income taxes withheld on your distribution.

Box 5 This represents the amount of Investment in Contract recovered in 2010, if any.

Box 7 The codes listed identify the type(s) of distribution you received:

1 ? Early (premature) distribution, no known exception. Code 1 is subject to an additional 10% tax for early pension distribution. 2 ? Early (premature) distribution, exception applies (this distribution is not subject to the 10% additional tax). 3 ? Disability. According to I.R.C. Section 72(m)(7) this code applies to PSERS members under age 62 with less than five years of credited service. 4 ? Death. Please be aware of a change beginning Tax Year 2010. The Form 1099-R will display Distribution Code 4 for periodic survivor annuitant benefits as well as for lump-sum or rollover distributions. 7 ? Normal distribution. A ? May be eligible for 10-year tax option. G ? Direct Rollover.

Box 9a This box is applicable to members born prior to January 1, 1936. It is populated with your percentage of total death benefit distributions.

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