Category Archives: Retirees

News and Information for members of the retirement system who are enjoying their retirement

Power of Attorney

Power of AttorneyThe NYSLRS Special Durable Power of Attorney form allows you to designate someone else to act on your behalf regarding retirement benefit transactions. The person you designate, referred to as an “agent,” could be your spouse, another family member or a trusted friend.

Why is this important? Under normal circumstances, NYSLRS won’t release your benefit information to anyone else without your permission — even to your spouse. With a power of attorney (POA) on file, we would be able to discuss your benefits with the agent you appointed.

The NYSLRS POA form is specific to retirement transactions and meets all New York State legal requirements. You may want to designate a power of attorney in case of emergency, hospitalization or unexpected illness, but you don’t have to wait until something happens before you file a NYSLRS POA form.

What Can Your Agent Do?

The NYSLRS form is for a “durable” POA, which means the person you designate can act for you if you become incapacitated. But the NYSLRS POA form only covers Retirement System transactions. It does not authorize your agent to make health care decisions for you or make changes to your Deferred Compensation plan.

Your agent can get account-specific information about your benefits by phone, email or mail. Your agent can request copies of documents in your retirement file or update your address or phone number. If you are still an active member, your agent can also take out a NYSLRS loan or file a retirement application for you. If you are retired, the agent can change the amount of taxes withheld from your pension.

Special Authority

If you use NYSLRS POA form, and your agent is your spouse, domestic partner, parent or child, they will have “gifting authority.” That means they can direct deposit money into a joint bank account, designate or change your death benefit beneficiaries, or choose a retirement payment option that provides for a beneficiary after your death.

If you wish to assign gifting authority to an agent who is not your spouse, domestic partner, parent or child, you must indicate that you want your agent to have the ability to designate him or herself as a beneficiary. This can be done in the “Modifications” section of the NYSLRS POA form.

Find Out More

A power of attorney is a powerful document. Once you appoint someone, that person may act on your behalf with or without your consent. We strongly urge you to consult an attorney before you execute this document.

You can also find information on the Power of Attorney page on our website.

Taxes After Retirement

Calculating post-retirement expenses is crucial to retirement planning. For instance, predicting how much you will pay in taxes can be difficult, because your tax bill depends on your individual circumstances. Most retirees spend less on taxes than they did when they were working, largely because their incomes have gone down. But there are other reasons you may have a lighter tax burden after retirement.

taxes after retirement

New York State Taxes

As a NYSLRS retiree, your pension will not be subject to New York State income tax. New York doesn’t tax Social Security benefits, either.

You may also get a tax break on any distributions from retirement savings, such as deferred compensation, and benefits from a private-sector pension. Find out more on the Department of Taxation and Finance website.

Be aware that you could lose these tax breaks if you move out of New York. Many states tax pensions, and some tax Social Security. For information on tax laws in other states, visit the website of the Retired Public Employees Association.

Federal Taxes

Unfortunately, most of your retirement income will be subject to federal taxes, but there are some bright spots here.

Your Social Security benefits are likely to be taxed, but at most, you’ll only pay taxes on a portion of your benefits. You can find information about it on the Social Security Administration website. (If you’re already retired, use the Social Security Benefits Worksheet in the Form 1040 instructions to see if any of your benefits are taxable.)

Throughout your working years, you’ve paid payroll taxes for Social Security and Medicare. For most workers, that’s 6.2 percent (Social Security) and 1.45 percent (Medicare) out of every paycheck. But Social Security and Medicare taxes are only withheld from earned income, such as wages. Pensions, Social Security benefits and retirement savings distributions are exempt. Of course, if you get a paying job after retirement, then Social Security and Medicare taxes will be deducted from that pay check.

Once you turn 65, you may be able to claim a larger standard deduction on your federal tax return. For more information on the amounts of this deduction, please see the 2018 IRS Tax Map.

To better understand how your retirement income will be taxed, it may be helpful to speak with a tax adviser.

Computer System Upgrades This Spring

From April 19 through mid-May, NYSLRS will conduct a series of computer system upgrades to improve the services available to our customers.

Throughout the upgrade period, you will be able to conduct business with NYSLRS by email, mail and phone, but not through Retirement Online.
system upgrades

  • If you need to apply for a loan during the upgrade period, you can fill out a loan application and mail it to our office. Visit our Loans page for links to the applications and more information.
  • If you need to update your beneficiaries, fill out the Designation of Beneficiary form (RS5127). If you mail it to us “Certified Mail — Return Receipt Requested,” we will consider it as having been filed on the date it was mailed. Your beneficiaries will be updated in our system shortly after the upgrade is completed.
  • We will continue to process requests for income verification letters promptly.
  • Your monthly pension payments will not be affected.

For the latest information about the upgrade, please visit our Contact Us page. If you have any questions, please contact our Call Center at 1-866-805-0990 (518-474-7736 in the Albany, NY area), or email them using our secure contact form.

Retiree Annual Statements Coming

If you are a NYSLRS retiree and received benefits in 2018, your Retiree Annual Statement (RAS) should be coming in the mail soon, if you haven’t received it already.

The Retiree Annual Statement provides important information about your retirement account. You should keep your copy in a safe place.

couple reviewing their Retiree Annual Statement

What’s Inside

Information in your annual statement includes:

  • Your retirement number. To protect your privacy, use this number instead of your Social Security number when conducting business with NYSLRS.
  • Your monthly benefit before taxes and deductions.
  • Your total net benefit for the year. (Your benefit after taxes, deductions and credits.)
  • The total amount of any cost-of-living adjustment (COLA).
  • Your total Medicare credits.
  • Federal tax withholding and other deductions taken from your pension, such as union dues.
  • Health insurance premiums. (NYSLRS doesn’t administer health insurance benefits, but we deduct a retiree’s premiums at the request of a former employer.)

Not a Tax Document

While your Retiree Annual Statement includes information about your benefit payments and tax withholding, it is not a tax document and should not be used for filing your federal income tax return. NYSLRS mailed 1099-R tax forms to retirees and beneficiaries in January.

If you need a reprint of your 2018 1099-R to file your taxes, you can order one online. Reprints will be mailed to the address we have on file for you, so if you’ve moved recently, you should check to make sure your contact information is up-to-date before requesting a reprint. The easiest way to check and update your address is with Retirement Online, or you can contact us for help.

Staying Informed

News & Notes, our semiannual newsletter, will be included with your RAS. The newsletter will help you keep up with the latest news about NYSLRS and other topics of interest.

Your RAS provides a snapshot of your NYSLRS account as of December 31, 2018, but you can get up-to-date information by signing in to Retirement Online. Retirement Online is also a convenient and safe way to conduct business with NYSLRS. If you don’t already have an account, you can learn more or register today.

And when there is a change in your net benefit amount, NYSLRS will notify you by mail or email. Let us know how you would like to receive information from NYSLRS by choosing your correspondence preference via Retirement Online.

Taxes and Your NYSLRS Pension

Tax season is coming.

The Internal Revenue Service (IRS) will begin accepting tax returns later this month. In late January, NYSLRS will mail tax information to retirees (and some members and beneficiaries) so they can file their taxes.

1099-Rs

NYSLRS pensions are not subject to New York State income taxes, but they are subject to federal taxes. By January 31, we’ll mail 1099-R tax forms to nearly half a million retirees and beneficiaries. We also mail 1099-Rs to beneficiaries who received taxable income from NYSLRS in 2018, members who have taken taxable NYSLRS loans or have defaulted on their loans, and those who ended their membership and withdrew their contributions in 2018.

A 1099-R shows:

  • The total benefit paid to you in a calendar year.
  • The taxable amount of your benefit.
  • The amount of taxes withheld from your benefit.

If you don’t get your 1099-R by the second week of February, you can request a reprint. This year, reprints will be available for calendar years 2016, 2017 and 2018.

1099-R Interactive Tutorial

1099-r tax form tutorial screenshot

Understanding your 1099-R Tutorial

If you have questions about the information on the form, we feature an interactive 1099-R tutorial on our website. It walks you through a sample 1099-R and offers a short explanation of specific boxes on the form.

Changing Your Federal Tax Withholdings

Because federal tax law was revised for 2018, you may discover that you had too little or too much withheld. You can change your federal tax withholding at any time by sending us a W-4P form. (A handy tutorial about the W-4P  walks you through the steps on filling it out.)

W4-P Tax form tutorial screenshot

Understanding your W-4P Form Tutorial

We offer a federal tax withholding calculator. Enter a marital status and a number of exemptions into the calculator to see how much we would withhold based on current tax tables.

For more information, please visit the Taxes and Your Pension page on our website.

Popular Blog Posts of 2018

Before we say goodbye to 2018, let’s take a look back at a few of the year’s most popular blog posts.

most popular posts of 2018

NYSLRS Basics: Final Average Salary

For NYSLRS members, the formulas used to calculate our pension benefits are based on two main factors: service credit and final average salary. While service credit is fairly straightforward — it’s generally the years of service you’ve spent working for a participating employer — what is a final average salary (FAS)?

Will Your Retirement Age Affect Your Benefit?

Some special plans allow NYSLRS members to retire after 20 or 25 years with no pension reduction. However, most of us have a choice to make: wait until the full retirement age specified by their plans or retire as early as age 55. It’s an important decision; those who retire early may receive a permanently reduced pension benefit.

Federal Withholding and Your Pension

Retirees: While your NYSLRS pension is not taxed by New York State, it is still subject to federal income tax. If your tax bill is larger than expected, or if you’ve been getting a hefty tax refund regularly, you may want to adjust the federal withholding from your NYSLRS pension. Follow these step-by-step instructions.

NYSLRS — One Tier at a Time: ERS Tiers 3 & 4

Many Tier 3 and 4 members of the Employees’ Retirement System (ERS) are eligible to retire under the same retirement plan, so we often think about them together. According to our most recent numbers, the combined tiers make up nearly 60 percent of ERS members — by far the largest segment. Here is a quick look at the benefits these members may receive before and after retirement.

Age Milestones for Retirement Planning

Even with a defined-benefit plan like you receive through NYSLRS, retirement planning is not a one-time task. Whether you’re reviewing your NYSLRS benefits or other retirement matters (like Medicare coverage or required minimum distributions), there are important considerations at almost every age leading up to retirement — and even in the years that follow.

Retirees: Know Your Post-Retirement Earnings Limit

Retirees: Know Your Post-Retirement Earnings LimitAs a NYSLRS retiree, you can work for a public employer after retirement and still receive your pension, but there may be limits on how much you can earn.

Public employers include New York State, municipalities in the State (cities, counties, etc.), school districts and public authorities. If you’re self-employed or work for a private employer, another state, or the federal government, you can collect your full NYSLRS pension no matter how much you earn. (However, earnings for most disability retirees are limited whether they work for a public or private employer. To find out your earnings limit, please contact us.)

Two sections of New York State Retirement and Social Security Law (RSSL) apply to NYSLRS service retirees who return to work in the public sector.

Section 212: Earnings Limit

Section 212 of the RSSL allows retirees to earn up to $30,000 per calendar year from public employment. There is generally no earnings restriction beginning in the calendar year you turn 65. (Special rules apply to elected officials.) If you are under 65 and earn more than the Section 212 limit, you must:

  • Pay back, to NYSLRS, an amount equal to the retirement benefit you received after you reached the limit. And, if you continue to work, your retirement benefit will be suspended for the remainder of the calendar year.

OR

  • Rejoin NYSLRS, in which case your retirement benefit will be suspended.

Section 211: Employer Approval

Under Section 211, the earnings limit can be waived if your prospective employer gets prior approval. (In most cases, the New York State Department of Civil Service would be the approving agency.)

Section 211 approvals apply to a fixed period, normally up to two years. Approval is not automatic; it is based on the employer’s needs and your qualifications.

Before you decide to return to work, please, please read our publication, What If I Work After Retirement? If you still have questions or concerns, please contact us.

A Snapshot of NYSLRS Retirees

This fall, NYSLRS published our Comprehensive Annual Financial Report (CAFR), with the latest data from the State fiscal year ending March 31, 2018. It’s a publication full of details about NYSLRS members, retirees and beneficiaries, as well as information about NYSLRS investments.

In this post, let’s dive in and take a look at NYSLRS retirees and the places they call home.

NYSLRS Retirees by the Numbers

As of March 31, 2018 (the end of the State fiscal year), NYSLRS provides pension benefits to 470,596 retirees and beneficiaries.

Six hundred ninety-five of them live outside the United States, in places like England and the Philippines. However, the vast majority live here in the U.S. In fact, while 22 retirees and beneficiaries have found themselves in the Great Plains of North Dakota, and more than 37,000 now make the sunshine state of Florida home, nearly 79 percent of NYSLRS retirees and beneficiaries — some 370,329 — live right here in New York.

Where NYSLRS Retirees live in the US

NYSLRS Pensions at Work

NYSLRS retirees live in our communities, in every county of the State. Their pension money flows right back into our neighborhoods, stimulating and growing local economies. In 2017 alone, NYSLRS retirees generated $12 billion in economic activity in New York State. They pay property taxes, state and local sales taxes, and they spend money at local businesses. In fact, in 2017, spending by NYSLRS retirees and their beneficiaries was responsible for the creation of an estimated 73,000 local jobs.

An Award-Winning Publication

NYSLRS has received a Certificate of Achievement for Excellence in Financial Reporting for the CAFR for the last 14 years. It’s a national award recognizing excellence in the preparation of state and local government financial reports.

There’s more to find out about retirees, members and NYSLRS’ investments. You can check out this year’s CAFR and CAFRs from years past on our website.

Retirement Planning Tip: Required Minimum Distributions

Required Minimum DistributionsIf you have tax-deferred retirement savings (such as certain 457(b) plans offered by NYS Deferred Comp), you will eventually have to start withdrawing that money. After you turn 70½, you’ll be subject to a federal law requiring that you withdraw a certain amount from your account each year. If you don’t make the required withdrawals, called Required Minimum Distributions (RMDs), you could face significant penalties.

RMDs are never eligible for rollover into other retirement accounts. You must take out the money and pay the taxes.

Calculating the Distribution

The RMD amount must be calculated annually. It’s based on the account’s balance at the end of the previous calendar year and the life expectancy of you and your beneficiary. Check out AARP’s Required Minimum Distribution Calculator for an easy way to determine your required distributions. Many retirement plan administrators, including the New York State Deferred Compensation Plan, will inform you of your RMD amount, but it’s your responsibility to take the required distribution.

Potential Penalty

If you don’t take the required distribution, or if you withdraw less than the required amount, you may have to pay a 50 percent tax on the amount that was not distributed. (You must report the undistributed amount on your federal tax return and file IRS Form 5329.)

The IRS may waive the penalty if you can show that your failure was due to a “reasonable error” or that you have taken steps to correct the situation. You can find information about requesting a waiver on page 8 of the Form 5329 instructions.

What Accounts Require Minimum Distributions?

Most retirement accounts you’re familiar with require these annual withdrawals:

  • 457(b) plans
  • IRAs (traditional, SEP and SIMPLE)
  • 401(k) plans
  • 403(b) plans
  • Profit-sharing plans
  • Money purchase plans

Since contributions to Roth IRAs have already been taxed, the IRS does not require distributions from Roth IRAs at any age.

As with most things investment-related, a lot depends on your particular circumstances. If you have questions, contact your financial advisor or your plan administrator.

A Good Plan Can Ease Transition to Retirement

When people talk about retirement planning, they’re usually talking about money. But there is another aspect that people often forget. What will you do with all that newfound free time?

Sure, after decades of hard work, thoughts of sleeping late and taking it easy seem pretty good. But retirement is a big transition, and many retirees don’t consider its potential psychological consequences.

steps to ease transition to retirement

Create a Plan and Schedule

While you may have some complaints about your job, it is an important part of your life. It helps define who you are and can give you a sense of accomplishment. It provides structure, mental stimulation and social interaction. Leaving the workforce creates a big void, and watching daytime TV or frequent trips to the grocery store may not be enough to fill that void. Empty or aimless hours can lead to boredom, disenchantment and even depression.

You may have a long list of things to do, places to go, books to read, but it won’t mean much if you don’t act. To successfully manage your time, you’ll need to actively plan and create a schedule. Set down how you will spend each day of the week, blocking out time for chores, social engagements, hobbies and exercise. Sticking to a schedule will give your days structure and give you a sense of purpose.

Stay Active and Engaged

For most people, staying busy and remaining socially engaged are essential to a satisfying retirement. That’s why some retirees go back to work full-time, while others opt for part-time or seasonal jobs.

But a retirement job doesn’t necessary mean continuing to do the same old thing. Retirement is an opportunity to reinvent yourself. Do something you’ve always wanted to do, something fun and challenging.

Hopefully, you’ve planned your retirement so you won’t need to work to meet basic needs, so your retirement gig won’t have to pay a lot. In fact, maybe the job for you is one that doesn’t pay at all, at least monetarily. There are countless organizations looking for volunteers, so it shouldn’t be hard to find opportunities that match your skills and interests.

Volunteering just a few hours a week will give you something to look forward to and keep you connected to the outside world. And studies show that it can improve both your mental and physical well-being.

Exercise Your Body and Brain

Regular exercise not only keeps you physically fit, it also increases your sense of well-being. Whatever you do to get exercise, make it part of your regular schedule. Consider taking a fitness class at a local gym, which also adds a social element to your workout. (And you can up the ante by trying something new, like a martial arts class.)

Don’t forget to exercise your brain. A course or workshop can help you discover a new side to yourself (the painter, the mystery writer, the master of topiary). You may want to enroll in classes at a local community college or even return to school full-time.

Whatever you do, make sure it’s part of a plan – a plan for a happier retirement.