Most of your retirement benefit will be subject to federal income tax. Only the portion taxed before it was contributed is exempt. Since September 1, 1984, many employers began deducting member contributions before taxes.
After you retire, DRS will let you know what portion of your contributions have already been taxed. The IRS refers to this taxed amount as your “cost basis.” You must complete
a W-4P form to notify DRS how much of your benefit should be withheld for taxes. If you do not, DRS will follow IRS rules requiring
withholding as if you are married and claiming three exemptions. It is your responsibility
to declare the proper amount of taxable income on your income tax return.
Retirement benefits are not generally subject to assignment or attachment. However, payments received by you in the form of retirement benefits, or as a refund of your contributions, may be subject to payment of court and administrative orders for spousal maintenance and child support, or payment of any orders authorized by federal law.
DRS is authorized to divide pensions between members and ex-spouses based upon court-ordered property division. If the divorce decree complies with the applicable law, DRS will send the property division payment directly to the ex-spouse. For more information, review the DRS publications, Can a Legal Order Affect My Retirement Account? or How Can a Property Division Affect My Retirement Account?
The Public Employees’ Retirement System is administered by DRS. The Director of DRS is appointed by the Governor. The current record keeper for Plan 3 defined contribution accounts is the ICMA Retirement Corporation (ICMA-RC).
Your retirement benefit accrues from the first day of the month following the date you separate from service. Your benefit is paid at the end of each month and, in most cases, can be deposited directly in your bank or credit union account.
If you receive an overpayment of your retirement benefit or withdrawal, DRS will require that the overpayment be repaid. If there is an underpayment, DRS will correct the error and pay you in full.
Under DRS internal review procedures, all “appeals” begin as “petitions.” You may challenge a decision of a DRS administrator by filing a petition within 120 days of your receipt of the decision. A petition will be reviewed by the DRS Petitions Examiner.
To file a petition, complete and submit a detailed statement of:
The Petitions Examiner will ask for information from the parties involved. Usually, this means you, DRS, and possibly your employer. After review, the Petitions Examiner will enter a written decision and mail that decision to you by certified mail.If you are not satisfied with the petition decision, you may file an appeal within 60 days of receipt of the decision. Included with your petition decision will be information describing how to file an appeal. An appeal will be heard by either DRS’ Presiding Officer or an Administrative Law Judge.