IRS Forms and Taxes

Understand your retirement taxes
Have questions about how your pension or DCP withdrawals are taxed? You’re not alone. This page covers the most common tax questions about retirement payments, IRS forms like the 1099-R, and federal withholding. For anything beyond what’s covered here, talk with a tax advisor. DRS and the record keeper, Voya can’t provide personal tax advice.

hese are the tax questions we’re asked most often. Keep in mind you’ll need to work with a tax advisor if you have questions beyond the information we can provide. DRS and the investment record keeper Voya are not able to offer tax advice.

Will my monthly DRS pension payments be taxed?

Yes. Whether you are in Plan 1, 2 or 3, your retirement contributions are generally deducted from your before-tax salary. This means these amounts have not been federally taxed. When you withdraw these funds, you will pay federal income tax on the money you receive. When we issue payment, DRS withholds any required IRS federal income taxes for your distribution type.

No. Since you pay Social Security taxes when you make pension and DCP contributions into those accounts, Social Security taxes will not be withheld from those payments when they are paid to you in retirement. Any benefits you expect to receive from Social Security will not be impacted by your pension or DCP income.

How do I change my pension withholding amount?

You can change your withholding amount by completing a W4P form. Use this form for periodic (monthly/annual) payments. You can send this to the DRS mailing address (Department of Retirement Systems, PO Box 48380, Olympia, WA 98504-8380).

View this short W4P Withholding video for tips on using the withholding calculator to estimate your tax withholding amount.

Will my Plan 3 investment withdrawals be subject to income tax?

Yes. You make these contributions before tax and you will owe federal income tax for these payments when you receive them. Depending on the type of withdrawal, we will withhold a percentage required by the federal government.

Sometimes customers ask whether their Plan 3 contributions can be made as Roth, or taxed contributions. The answer is no. Plan 3 is a governmental 401(a) hybrid plan with a pension and investment. The 401(a) does not allow taxed contributions. If you want to make Roth contributions, check out DCP.

Will my DCP withdrawals be subject to income tax?

If your contributions were pretax, yes. These withdrawals will have federal income tax. October 2023, DCP introduced a Roth option. With DCP Roth, you will pay the tax when you make the contribution. As long as you meet withdrawal requirements, DCP Roth withdrawals will be tax-free. The tax-free requirements include a five-year holding period from the year of your first contribution and a minimum age of 59½. If you withdraw before meeting these requirements, any investment earnings will be taxed. More about DCP.

What tax form will I receive in retirement?

While you are employed, you receive a form W-2 for tax season. After you retire, the form you receive is a 1099-R. You can download this form from your online account each tax season. You will also receive a copy in the mail, so it is important to keep your contact information up to date—even in retirement (update your address online or use this form). If you have DCP or Plan 3 investments in addition to a DRS plan pension, you will also receive a 1099-R form for any withdrawals you make from those accounts. You also might want to read this article about deductions in retirement, or listen to this podcast episode.

If I live in another state, will state income tax be withheld?

Washington does not have state income tax, and outside of DCP withdrawals, DRS does not withhold state income tax. If you live in a state with state income tax, you will be responsible for determining any additional taxes owed when you receive a withdrawal or monthly pension payment. As of 2025, there are nine states that do not have state income tax: Washington, Texas, Florida, New Hampshire, Tennessee, Wyoming, Alaska, South Dakota and Nevada. If you aren’t sure where you will live when you retire, add this information to your retirement planning.

How can the Washington Deferred Compensation Program (DCP) help you save on taxes?

It depends on whether your DCP contributions are pretax or Roth. Pretax contributions lower your overall taxable income in the year you make the contributions. Roth contributions are taxed when you make them, but tax-free in retirement when you meet the minimum requirements. Find out more about the differences between the DCP options.

There is also something called the Federal Tax Savers credit where you can write off a portion of your annual DCP contributions if you qualify. Visit the IRS website to find out more about this credit. If your employer doesn’t offer Washington’s DCP, find out what retirement savings options you do have, such as a 457 or 403b. Or look into opening a traditional or Roth IRA.

IRS forms

Form	About the form
1099-R	Like the W-2 you receive when you’re employed, retirees have their own version of income reported to the IRS. This is a tax form called a 1099-R. 1099-R forms for the preceding tax year are normally mailed and posted in your online account near the end of January. More about the 1099-R tax form.
W-4P	A form to indicate taxes you would like withheld from your pension or annuity payments. Use this form for periodic (monthly/annual) payments. You can send this to the DRS mailing address. View this short W4P Withholding video for tips on using the withholding calculator to estimate your tax withholding amount.
W-4R	A form to indicate taxes you would like withheld from your nonperiodic (lump-sum/one time) payments. You can send this form to the DRS mailing address.
W-8BEN	Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Note: This form is on the IRS website. Use the search function on the IRS website to locate the form.
W-9	Request for Taxpayer Identification Number (TIN) and Certification. Note: This form is on the IRS website. Use the search function on the IRS website to locate the form.

More IRS resources

Federal Income Tax Withholding Calculator

This tool is provided to assist you with your federal income tax withholding. The calculations are based on information you entered, and do not reflect the full complexity of federal income tax law. Contact your tax advisor or the IRS if you have questions about your taxes.

If you’re retired, you may sign into your online retirement account, and update your withholding by using a personalized calculator.

IRS plan types

DRS retirement plans

401(a) All DRS retirement pension plans are 401a plans. This is a type of retirement plan made available to those working in government agencies, educational institutions, and non-profit organizations. More about your plan.
457(b) The Deferred Compensation Program (DCP) is a 457 plan administered by DRS. DCP is similar to a 403b program. More about DCP.