Tax season sneaks up on many of us and if you’re not planning ahead, April could bring some surprises. No matter where you’re at (working or retired) it’s smart to look at your income and spending for 2025 now, rather than in February or March. Proactive planning can save you money, reduce stress, and help you make the most of your financial options. If you’re working If you’re actively working in 2025, here are some things to consider that could help you manage your tax liability. Review your pretax vs. Roth DCP contributionsCheck your tax bracket. If you’re near the top, consider increasing your pretax DCP contributions to lower your taxable income for your 2026 income. If you’re on the lower end of the tax bracket, it might be a smart time to convert some pretax DCP funds to Roth. You’ll pay taxes now at a lower rate. Then in retirement, your withdrawals will be tax-free. And you don’t have to convert all of your pretax funds now. You could make small conversions over many years. This could help spread out your tax burden more efficiently over time. Use the pretax to Roth form to make the conversion. Check for tax creditsMany people miss out on tax credits simply because they don’t know if they qualify. Talk to a tax professional about what’s available. Some tax credits include: education credits, earned income credits, energy-efficient home upgrades. Healthcare expenses: FSA or DCAPReview your medical expenses and dependent care costs. If they’re adding up, it may be worth enrolling in a Flexible Spending Account (FSA) or Dependent Care Assistance Program (DCAP) for 2026. These plans can lower your taxable income next year and help cover essential costs. Charitable donationsIf you itemize your deductions and your donations exceed the standard deduction, charitable giving can be a great way to reduce your taxable income. Just be sure to keep detailed records. Understand your paycheckA lot of us get surprised at tax time because we only look at our gross salary and forget about withholdings, benefits deductions, and other pre-tax contributions. Make it a habit to review your pay stubs and make sure everything aligns with your financial goals. Leaving the workforce?If you’re retiring soon, you may be able to cash out unused leave and roll it into your Deferred Compensation (DCP) account. This can help reduce your taxable income in the year you retire and pad your retirement savings. If you’re retired Tax planning doesn’t stop once you retire. In fact, staying on top of your income and spending is just as important in retirement. Review your pretax vs. Roth DCP contributions If you’re on the lower end of your tax bracket, it might be a smart time to convert some pretax DCP funds to Roth. You’ll pay taxes now at a lower rate. Then, your withdrawals later, will be tax-free. And you don’t have to convert all your pretax funds now. You could make small conversions over many years. This could help spread out your tax burden more efficiently over time. Use the pretax to Roth form to make the conversion. Review your W-4 and withholdingsMake sure you’re withholding enough from pension payments, Social Security, or investment accounts. If you don’t withhold enough, it can result in a tax bill and potential penalties next April. Plan for Required Minimum Distributions (RMDs)If you’ve reached RMD age (73 in 2025 for many retirees), you’re required by the IRS to withdraw a percentage of your funds from any pretax account. This includes DCP or Plan 3 investment accounts as well as any IRAs or 401(k)s. The DRS record keeper, Voya Financial, will send you an RMD check in November and a 1099-R tax form in February if you have a Plan 3 or DCP account. For more information, view the DRS withdrawals page, or a DRS podcast episode about RMDs. Check your cash flowTake a close look at your accounts. Are you holding enough cash to meet expenses without having to sell investments? Consider consolidating accounts if you’re juggling too many, it can make things easier to manage. Final thoughts No matter your stage of life, the key message is simple: don’t wait until tax time to think about taxes. Look at your income, spending, and savings options now, so you can make smart moves that benefit you both today and down the road.

We often talk about early retirement. But what about retiring later? Many people choose to continue working beyond the traditional retirement age, or they separate from employment but wait to start collecting retirement income. Whether you’re delaying for personal, financial or healthcare reasons, let’s explore how this timing affects your benefit. Why some people delay retirement There are many reasons employees choose to keep working past their first eligibility date. Some want to build more savings or earn additional service credit. Others simply enjoy their work or want to maintain employer-provided healthcare coverage, especially if a spouse isn’t yet eligible for Medicare. Every situation is unique, and delaying retirement isn’t necessarily good or bad. It just depends on your goals. The key is knowing what happens to your retirement income sources when you wait. Pension vs. Social Security: how they differ A common misconception is that a DRS pension works like Social Security, where delaying payments can increase your monthly benefit. That’s not the case. Once you’ve separated from employment and are age 65 or older, there’s no monetary advantage to delaying your pension. Your benefit is based on your service credit and Average Final Compensation (AFC) at the time you separate, not the date you apply for retirement. For some DRS plans, normal retirement is before age 65. Review your plan page for individual retirement requirements. In summary, if you’re already eligible and no longer working, your pension amount won’t continue to grow while you wait to start it. What happens when you delay retirement If you’ve separated from service and haven’t yet applied for retirement, your account remains inactive with DRS. You can apply for your pension at any time once you reach the eligible age. However, your benefit will be calculated using your service and salary information as of your separation date. For those still working and earning service credit, each additional month adds credit toward your benefit formula. But once you’ve stopped working, the value is fixed. Plan 3 and LEOFF 2 members: If you have at least 20 years of service credit when you leave employment and do not start to receive your pension, it will automatically increase by about 3% for each year you delay receiving it up to your normal retirement age. This is called benefit indexing and is exclusive to Plan 3 and LEOFF 2. Retroactive retirement If you’re eligible and apply for retirement later, you could have a retroactive retirement date. This means your pension could start from the first eligible date, and you’d receive a lump-sum payment for the months you delayed. You need to be separated from your DRS-covered employer during the delayed months. Contact DRS for assistance. Important tax and income consideration: If you are paid retroactively, the lump sum amount will apply to your annual taxable income for that year. This can be a considerable amount of federal tax if you delay the pension for an extended time. Also consider impacts to your Social Security and other income-based programs. Can I separate early, delay retirement, and still enroll in PEBB retiree healthcare? Yes, if you’re in PERS, SERS or TRS Plan 2 or 3 and meet the age and service requirements for an early retirement (age 55 or older with the years of service credit needed) at the time of separation, you can delay receiving your retirement benefit and still be eligible for PEBB retiree coverage. Because DRS does not administer healthcare, we are unable to assist with healthcare questions or accounts. Visit the PEBB Deferral section of the Health Care Authority (HCA) website for more information. Can I time the withdrawals for different parts of my retirement? Short answer? Yes. If you have multiple retirement income sources, you can choose when to receive these funds. For example, let’s say a Plan 3 member in TRS also has a Deferred Compensation Program (DCP) account through DRS. They could choose to collect their pension retirement from TRS 3 at a different time from their investment contribution account funds in TRS 3. They could also choose to withdraw DCP funds at an earlier or later date. Many people use supplemental retirement income accounts like DCP to separate early and delay pension retirement, or to span any income gaps before collecting Social Security. If you’ve joined multiple types of DRS-covered systems (PERS, SERS, TRS, LEOFF, PSERS, WSPRS) see information for dual members. Returning to work after retirement Some retirees decide to return to work. Depending on your plan and the type of job, you may be able to work while continuing to collect your pension. Or you may need to suspend it temporarily. DRS provides specific guidelines on “retiree return to work” rules for each plan, so it’s worth reviewing those details if you’re considering post-retirement employment. More about returning to work. The bottom line Delaying retirement is a personal choice, and sometimes a practical one. But when it comes to your pension, it’s important to know the facts. Once you’ve separated from employment and reached full retirement age for your plan, your pension benefit doesn’t increase just because you wait. If you’re unsure what’s best for your situation, consider using the benefit estimator from your online account to create multiple estimate scenarios. If you’re within a year of retirement, you can contact DRS for a benefit estimate or to discuss your options. Knowing how timing affects your pension can help you make the most of your retirement years, whenever you decide to start them. Next steps Visit your plan page to review age and service requirements for retirement. Log into your DRS online account to review your years of service, estimate your pension income, or request an official benefit estimate to retire. While you’re there, check that your mailing address, personal email address and phone number are correct. This information is the only way DRS can contact you once you separate from employment. Looking for steps to retire? Visit the retiring section.

It can take a lifetime to accrue the retirement benefits you have earned. Unfortunately, it can take only one fraudulent scheme for those benefits to be negatively impacted. Beyond what DRS can do as an organization, it’s a best practice for all of us to take steps to keep our own account information secure. At DRS, we continue to enhance the security of our systems to protect your accounts. This means you may notice some changes to the website as we roll out these enhancements. Please know that as we do, we closely monitor the impact these changes could have on your experience as we strive to balance ease of use with security.   For example, you can now use an authenticator app or a landline phone as a multi-factor authentication device when logging into the website. We have also made other changes within the site. Soon, we will no longer accept email as an authentication method. If you use email for multi-factor authentication, please log in and set yourself up with one of the other options: text message, authenticator app or phone call. If you run into any issues using the website or are unable to complete an action on our website, please take a note of any on-screen instructions and feel free to contact us. Here are a few tips to keep in mind: Use strong passwords and a password manager: Strong passwords are critical to protecting data. They should be long, random, and unique. You can also use passphrases, which are a combination of random words that are easier to remember. Pick at least four words and string them together. A passphrase with no special characters is stronger than a shorter password with special characters.Password managers are a powerful tool to help you create long, random, and unique passwords for each of your accounts. Plus, they make storing passwords and user IDs easy. Turn on multi-factor authentication (MFA): Enable multi-factor authentication on all your online accounts that offer it, especially email, social media, and financial accounts. If you are given the option, use authentication apps or hardware tokens, which are more secure than MFA phones.  Update software: Ensure your software is up-to-date. This is the best way to make sure you have the latest security patches and updates on your devices. Install updates as soon as they become available. When buying Internet-connected technologies, choose devices that auto-update and that are made by brands from trusted countries. Trusted help. Technology continues to advance at a rapid pace. Many companies and organizations (like DRS) require their employees to take online cyber security trainings. Ask relatives or friends for tips on what they're learning. Protect your email account. Email is a holy grail for attackers because with access to your email, the attackers can instantly learn about you. Avoid using email services that don't have modern authentication like MFA and strong security practices. Consider establishing a separate email address only used for your financial accounts (banks, credit cards, credit agencies). Consider using a paid email service that provides additional protection against bad actors. This is a small investment that keeps you better protected. Freeze your credit. Set up an account for each of the three credit agencies (Equifax, Experian, and Transunion) and set up a credit freeze. You can temporarily lift the credit freeze when applying for a new credit card, bank account or loan. Configure text notifications. Getting notifications from your bank and credit cards when transfers occur or charges are made is helpful in identifying fraud. When following up with your bank, always use their phone number as listed on their website, not what's in an email or text message sent to you.  See the complete DRS Account Security Checklist. At DRS, it’s our goal to ensure that members receive the benefits they’ve earned. We take many steps to ensure your account is protected. You can find out more about retirement account security here.

The 2025 Annual Comprehensive Financial Report (ACFR) reflects our ongoing commitment to accurate and transparent financial reporting of the retirement systems. The DRS ACFR includes DRS’ financial statements, including notes and supporting schedules. Additional information included in the DRS ACFR is summarized in the following list: Financial trends and highlights Components of the net pension liability (asset) Membership demographics and employer participation Actuarial assumptions, methods and funding status Investment performance, policy and strategy Deferred compensation program information Financial information for employers The 2025 Participating Employer Financial Information (PEFI) is now available. The PEFI includes pension financial reporting information for DRS administered multiple-employer, cost-sharing retirement plans to assist participating employers with their pension financial reporting. Where to find previous reports Chapter 15: Financial Reporting in the DRS Employer Handbook includes links to reports published in the last few years. You can view and download historical ACFRs and PEFIs on the Washington State Library’s website.