Federal Tax Withholding and Your Pension

If your last federal tax bill was larger than you expected, or if you received a hefty refund, it might be time to review how much federal tax withholding comes out of your NYSLRS pension. If you’re not sure whether you need to adjust your federal withholding, you may want to check with a tax preparer.

Remember, NYSLRS only withholds federal income tax. New York State doesn’t tax your NYSLRS pension, and we can’t withhold for income tax for other states.

federal tax withholding and your pension

New W-4P Federal Tax Withholding Form

The IRS released a new version of their W-4P federal income tax withholding form. For 2023, NYSLRS was required to update our tax withholding form as well.

The new form no longer allows tax filers to adjust their withholding by electing a specific number of withholding allowances. Instead, the W-4P form has fields for increasing or decreasing the amount of withholding, including fields for tax credits and deductions. 

You do not need to submit the new W-4P unless you want to change the amount of your tax withholding.

To Change Your Withholding

Retirement Online makes it fast and convenient to view your current federal withholding information and make changes using our online form that collects the same information as the paper form. You can check your current withholding by signing in to Retirement Online and viewing your most recent pension pay stub. To change your federal tax withholding, click the green “Update My W-4P Tax Information” button on your Account Homepage.

If you update your withholding online by the middle of the month, your changes will generally be applied that month. We’ll notify you by mail or email (depending on your contact preference) when the update has been completed.

Completing the Form

Basic Withholding

Step 1. Select your filing status. If you want your federal withholding to be based only on the benefit amount you receive from NYSLRS, with no adjustments, you can skip steps 2 – 4.

Adjustments to Withholding (Dependents, Tax Credits)

Complete Steps 2 – 4 ONLY if they apply to you.

Step 2. If you have income from a job or more than one pension/annuity, in addition to your NYSLRS pension, or if you’re married filing jointly and your spouse receives income from a job or pension/annuity, you can enter that in Step 2.

Click “View Instructions” or see page 2 of the paper W-4P form for examples that may help you with this step.

Step 3. If you need to claim dependents, you can enter that information in Step 3.

Step 4. If you have other adjustments to make — other income, deductions or extra withholding — you can complete Step 4.

Click “View Instructions” or see page 3 of the paper W-4P form for instructions and a worksheet that may help you with this step.

If you prefer to send in a paper form, you can print, complete and submit our W-4P Withholding Certificate for Pension or Annuity Payments form to update your withholding information, however paper forms take longer to process. Please be sure you are using the new form (revised 12/22), because NYSLRS will no longer accept previous versions of the W‑4P form.

If You Receive More Than One Benefit Payment from NYSLRS

NYSLRS administers two retirement systems — the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS). It is possible to receive more than one benefit from one or both systems — as a retiree, a beneficiary or an ex-spouse who is receiving a benefit under a domestic relations order.

Generally, your withholding is tied to the retirement system. So, if your benefits are from the same system, you only need to submit your withholding information once and your preferences will be applied to all benefit payments you receive from that system. However, if you receive a benefit from both ERS and PFRS, you’ll need to submit a W-4P form for each system.

Your benefit payment pay stub will list whether the payment is from ERS or PFRS.

For More Information

Our Taxes and Your Pension page has additional information about withholding, including 1099-R tax form information, how to submit a paper W-4P form, what to do if you receive more than one benefit payment from NYSLRS and more.

If you need help completing the W-4P form, you can find phone numbers and online resources on the IRS Let Us Help You page.

Please note: Effective January 1, 2023, NYSLRS does not withhold federal income tax from benefits that are not subject to tax reporting.

21 thoughts on “Federal Tax Withholding and Your Pension

    1. NYSLRS Post author

      NYSLRS is unable to provide tax advice.­ For questions about federal taxes, please visit the Internal Revenue Service (IRS) website at http://www.irs.gov. You may also wish to speak to an accountant or tax preparer.

    1. NYSLRS Post author

      Please fill out and submit a W-4P form to increase the amount we withhold from your pension. Step-by-step instructions are available in the blog post above.

      If you have questions about your federal tax withholding, please email our customer service representatives using our secure email form at http://www.emailnyslrs.com. Filling out the secure form allows them to safely contact you about your personal account information.

  1. Erica

    How do I have federal taxes withheld from disbursements I receive from someone else’s retirement account through divorce order? I get a 1099-R showing nys exempt, but no withholding for federal. I want to change that.

  2. JoAnn Hughes

    been retired since 2008 and have had few problems with my withholding. When I used the incorrect formula for the amount to withhold for Federal taxes, a simple call to one of your reps solved the problem easily. The young lady was cordial, professional & patient with explaining things.

      1. Flanagan Jeanne

        Sad to say that when I made the same mistake, the gentleman I spoke with was not very helpful. I wanted to increase my withholding by $50/ month but my pension was cut in HALF for several months before it got sorted by asking for no more tax to be taken out this year. That money is gone til tax time next year. My CPA was unsure about the new form too. You cannot see the amount of money that will be taken from your pension until a day or two before the pension is deposited. I urge retirees to be very careful when completing this form. You do not have to list all your sources of income – just the pension. I’m glad to see this has been clarified in this newsletter but this would have been better information earlier this year.

        1. NYSLRS

          Retirees who need to update their withholding may wish to check with a tax preparer if they have questions on how to complete the new form.

  3. Bruce Winsor

    Two years in a row we have been short on Fed. withholdings. We adjusted to 8-9% in order to cover. My wife and I are receiving pensions along with other employment. Individually, they fall short for withholdings but added together were got walloped. Hope this helps.

    1. NYSLRS

      We recommend checking with an accountant or tax preparer if you need to adjust your federal withholding but aren’t sure how.

  4. Joanne P. Malecki

    Thanks for the reminder. My accountant said, after doing my taxes this year, that I should increase my withholding or start to pay quarterly tax estimates, since I had to pay an increasingly higher amount this year, due to other changes in my income. Rather than having to “remember” to do those quarterly payments, I chose to use your form to increase the withholding amount from my monthly pension; thanks for providing the link/form. Jo

  5. Kendra Eichholz

    Not really. I may be looking into depositing a portion of my one pension into the federal taxes for the future. As of now…. I do not know…. Thanks anyway. I will reconsider it in the future months. Sincerely, Kendra


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