Annuity payments are taxable income. You may update your withholding election at any time. If you do not complete withholding instructions, taxes will be withheld at the “Married with 3 Allowances” rate, based on IRS requirements. Refer to the instructions provided by the IRS for complete details for completion of your withholding instructions. The only deduction from a retiree’s monthly annuity is for income tax, with one exception, HELPS (see Note below).
To Withhold Federal Income Taxes
Online through MyTMRS
- Click on MyTMRS and follow the prompts to register and/or log in.
- Select “Update federal income tax withholding” located under “Your Withholding Election.”
- If you do not want anything withheld from your check, select the box “Withhold no federal income tax.”
- Choose a marital status rate and indicate the number of allowances you are claiming.
- If you wish to withhold an additional amount from your pension, enter the additional amount.
- Review the projected withholding amount, select the box below “Electronic Signature,” and click the “Submit withholding update” button.
Complete and sign the IRS W-4P Withholding Certificate for Pension or Annuity Payments.
- Fill out the Withholding Certificate portion:
- Full name and Social Security number
- Home address
- Leave the Claim or Identification Number box blank or use your TMRS ID, if known
- Check Line 1 if you do not want anything withheld from your check (and you do not need to fill in Lines 2 and 3).
- For Line 2, choose a marital status rate and indicate the number of allowances you are claiming.
- Fill in Line 3 if you wish to withhold an additional amount from your pension.
- Sign and date the form.
- Send the form (bottom of page 1) to TMRS either by mail or fax.
Withholding Certificates submitted to TMRS by the 15th of the month are typically updated for that month’s payment. Otherwise, the update may not be made until the following month.
What Happens Next?
- After we receive the withholding instructions, we will make the changes to your account records.
- The total amount of federal income tax withheld and the total amount of your pension or annuity payments each year are shown on your Form 1099-R, sent to you annually and available on MyTMRS.
- A federal law (the Pension Protection Act, HELPS provision) allows retirees who are Public Safety Officers to deduct health care or long-term care insurance premiums from their annuity payments so the retiree can deduct up to $3,000 annually from taxable income on their tax return. See How Do I…Set Up Insurance Payee under HELPS?