How Taxes Are Applied to TMRS Benefits 2007 Annual Training Seminar 2007, Texas Municipal Retirement System.

Taxes Are Applied to Income:  Refunds  PLSDs  Rollovers (tax-deferred)  Monthly retirement benefits

TMRS is a Qualified, Tax-Deferred Governmental Retirement System  What does “qualified” mean?  Tax-deferred — NOT TAX FREE.  What does “Employer pick-up” mean?

How Are Income Taxes Handled in Retirement?  Pre-1984  Post-1983 — non-payroll contributions, interest, and employer funds  Retiree is in control

Refunds and Partial Lump Sum Distributions (PLSDs)  There is tax liability if you don’t roll over  Trustee-to-trustee rollovers  Rollovers to 457 accounts — you don’t lose the tax liability

Rollovers into TMRS  When can TMRS accept a rollover?  Where can the money come from?

Taxable Status of Disability Retirement  Why won’t TMRS code a retiree’s 1099R so the IRS treats it as a disability retirement for tax purposes?  The elusive “code 3” issue!

Tax Saver Credit  What is it?  How does this help me?

Supplemental Death Benefits  Is the supplemental death benefit taxable?  Does the value of this fringe benefit have to be reported as taxable wages to an employee while they are working?

Pension Protection Act of 2006  Made permanent retirement plan changes enacted in 2001 that were set to expire after  Made major changes to funding rules for single and multiemployer plans (not public plans).  Liberalized retirement plan distribution and rollover rules.  Clarified the application of age discrimination rules on hybrid retirement plans.

HELPS Provision  TMRS begins participating in the program in January  Retired public safety officers may pay for their health insurance coverage from their monthly retirement annuity.  TMRS makes direct payment to health insurance provider from retiree’s annuity.  Up to $3,000 of the payment may be deducted on the retired officer’s tax return per year.

 Retirees who were public safety officers – law enforcement, firefighter, or EMS – are eligible.  Retiree’s employing city must verify status as a retired public safety employee.  Call TMRS if you need more information or to request the HELPS forms. HELPS Provision (cont.)

Questions & Answers HOW TO CONTACT TMRS: Toll-free: Web: