Taxes on your PERSI pension

• PERSI benefits are generally subject to federal and Idaho income tax.PERSI Taxes / 1099-R web page
• Idaho's Retirement Benefits Deduction lists the Firefighters Retirement Fund, certain police benefits and federal civil service and military pensions. It does not list the PERSI Base Plan for school employees. Check with the Idaho State Tax Commission.Idaho State Tax Commission, Idaho Retirement Benefits Deduction web page

Withholding and your 1099-R

• PERSI's 2019 handbook says new retirees got an RS-322 Tax Withholding form, and that unless they chose otherwise, federal tax was withheld at the rate for a married person with three exemptions. PERSI's current Taxes page says it now uses the federal W-4P and a State of Idaho withholding form, which you can update in myPERSI.Member Handbook (2019), p. 50, Federal Income Tax Withholding; PERSI Taxes / 1099-R web page
• PERSI mails your 1099-R by January 31, showing what it paid you and the tax withheld for the year. You can also view it in myPERSI. PERSI suggests reading IRS Publication 575 on pension income.Member Handbook (2019), p. 50; PERSI Taxes / 1099-R web page
• PERSI withholds Idaho income tax only if you ask on the withholding form. Benefits paid to retirees living outside Idaho have no Idaho tax withheld.Member Handbook (2019), p. 51, Idaho State Tax

Idaho income tax

• PERSI's 2019 handbook says new retirees got an RS-322 Tax Withholding form, and that unless they chose otherwise, federal tax was withheld at the rate for a married person with three exemptions. PERSI's current Taxes page says it now uses the federal W-4P and a State of Idaho withholding form, which you can update in myPERSI.Member Handbook (2019), p. 50, Federal Income Tax Withholding; PERSI Taxes / 1099-R web page
• Check with PERSIThe 2019 handbook says benefits paid to Idaho residents are subject to Idaho income tax, with certain amounts deductible based on filing status. The Tax Commission's current deduction page doesn't list the PERSI Base Plan, so check which deduction, if any, applies to you.The 2019 handbook's general wording and the Tax Commission's current list don't line up.Member Handbook (2019), p. 51, Idaho State Tax; Idaho State Tax Commission, Idaho Retirement Benefits Deduction page
• On the 1099-R, money you paid PERSI for a buyback or a service purchase with after-tax dollars isn't counted as taxable when it comes back to you in retirement.PERSI Taxes / 1099-R web page, Box 2a

Idaho's retirement benefits deduction

The Tax Commission's page lists these benefits for the deduction:

• The Firefighters Retirement Fund (FRF), which PERSI administers.
• Certain benefits for retired police officers of an Idaho city.
• Federal Civil Service Retirement System (CSRS) and military pensions.

It doesn't list the PERSI Base Plan, the plan that covers teachers and school employees. Check with PERSI or the Tax Commission about your own return. PERSI Taxes / 1099-R web page; Idaho State Tax Commission, Idaho Retirement Benefits Deduction page; Member Handbook (2019), p. 51

Contributions made before July 1, 1983

Contributions made before July 1, 1983 were already taxed, so part of the benefit is tax-free for members who made them. Member Handbook (2019), p. 51

Refunds

A refund paid to you has 20% federal tax withheld, and a 10% IRS penalty may apply under 59.5. Withdrawing Funds flyer (Nov. 2021); Member Handbook (2019), pp. 38-41; Account Withdrawal and Buyback web page See Leaving: refund or wait?

Questions