Your LAGERS retirement benefit is subject to all applicable State and Federal taxes. LAGERS will withhold taxes from your retirement benefit as directed by you. It is important to keep in mind that regardless of how much you withhold, you are responsible for any tax liability each year.
Taxes & 1099-Rs
What is Not Taxable?
If you have employee contributions with LAGERS. These contributions were made on an after-tax basis and are not taxable at the time of withdraw.
What is Taxable?
The portion of your benefit funded through employer contributions and investment return
Interest earnings on your employee contribution account
Partial Lump Sum Option (PLUS)
If you elect to take the Partial Lump Sum Option, that lump sum is also subject to all applicable state and federal taxes. LAGERS will automatically withhold 20% and forward to the IRS if the PLUS is disbursed directly to you. Please keep in mind that your actual tax liability may be more or less than 20%.
A retiree does have the option to directly roll over the entire PLUS amount to another qualified retirement account to delay any tax implications. If you elect this option, LAGERS will send you a direct rollover form during your application process.
You may also be subject to early distribution penalties, if you receive the payment before attaining age 55 if you are a general employee and age 50 if you are a public safety employee.
How do I adjust my withholdings?
LAGERS will withhold taxes from your monthly benefit for Federal and Missouri income taxes only. The amount withheld from your benefit is at your direction and can be changed at any time. To adjust your current withholding, you can either complete LAGERS Tax Withholding form and submit it to the LAGERS office OR log on to the myLAGERS member web portal.
Understanding Your 1099-R
All LAGERS retirees will receive a 1099-R form from the LAGERS office no later than January 31st each year. While similar to a W-2, the 1099-R form is issued specifically for pension recipients and will include information regarding the retiree's benefit paid during the past tax year.
If you took a Partial Lump Sum, you will receive a separate 1099-R
To determine the non-taxable portion of a benefit, if any, take the difference between box 1 and Box 2.
Does NOT include Health Care Premiums withheld under the Public Safety Exemption. Exemption is not indicated on your 1099-R, only on the year end check stub.
Does NOT include interest earned on member contributions.
Does NOT represent the non-taxable portion of the benefit.
State Income Tax Withheld from Benefit
Indicates type of distribution. Codes are listed on back of form.
Federal Income Tax Withheld from Benefit
Box 7: Distribution Code
Total Amount of Employee Contributions Including Service Purchases/Reinstatments
Box 2: Taxable Amount of Benefit
Missouri Public Pension Exemption
Married couples with Missouri adjusted gross income less than $100,000 and single individuals with Missouri adjusted gross income less than $85,000, may deduct up to 100 percent of their public retirement benefits, to the extent the amounts are included in their federal adjusted gross income.
The total public pension exemption is limited to the maximum social security benefit of each spouse. Married couples with Missouri adjusted gross income greater than $100,000 and single individuals with Missouri adjusted gross income greater than $85,000, may qualify for a partial exemption.
Taxpayers who also qualify for the Social Security or Social Security Disability Deduction, must reduce their public pension exemption by the amount of the Social Security or Social Security Disability Deduction.
To learn more visit www.dor.mo.gov or contact a qualified tax professional.
Public safety retirees may choose to have health and long term care premiums withheld from their monthly benefit. Up to $3,000 of those premiums may be deducted from Federal income taxes.
Effective September 1, 2012, LAGERS statutes were amended to allow a reduction in your federal taxable income in connection with premiums for various types of insurance if you qualify. In order to qualify you must have:
Been serving as a public safety officer (as defined by applicable federal law) when you retired.
Retired under the normal retirement provision of the system (meaning that you did not take an early retirement) or you must have taken a disability retirement. Rule of 80 qualified retirement does qualify.
The definition of eligible public safety officers is included in federal law (42 U.S.C. 3796b(9)). Generally, they are individuals who served a public agency in one of the following official capacities:
An individual involved in crime and juvenile delinquency control or reduction, or enforcement of the criminal laws (including juvenile delinquency), including, but not limited to police, corrections, probation, parole, and judicial officers
Officially recognized or designated public employee members of a rescue squad or ambulance crew
Chaplains serving in a police or fire department.
The contents of this page are not intended to and should not be considered tax advice. LAGERS staff is not qualified to give such advice. This information does not amend or overrule any applicable statute or administrative rule. In the event of conflict, the applicable statute or administrative rule will prevail. If you have questions regarding your specific tax situation, please contact a qualified tax professional.
Phone: 1-800-447-4334 Local: 573-636-9455 Fax: 573-636-9671 Email: firstname.lastname@example.org
701 West Main St. PO Box 1665 Jefferson City, MO 65102
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