Your pension and DC account
The pension is taxable as ordinary income. INPRS can withhold federal, state, county and local taxes from monthly payments, and sends a 1099-R by January 31. It must withhold 20% federal tax on taxable lump sums paid to you. After-tax (basis) DC contributions come back tax-free; earnings on them are taxable. The sources say nothing about Indiana's own tax treatment of the pension. TRF Hybrid At A Glance PDF p. 2; Hybrid Handbook p. 41, §8.1-8.3; p. 36, §7.13
Required minimum distributions
Required minimum distributions start April 1 after the later of the IRS RMD age (73 for those turning 72 in 2023-2032; 75 for those born 1960 or later) or separation. Hybrid Handbook p. 44, §10.3
From the sources
- Your pension is taxed as ordinary income. INPRS can withhold federal, state, county and local tax, and sends a 1099-R by January 31. Taxable lump sums paid to you have 20% federal tax withheld.TRF Hybrid At A Glance PDF p. 2; Hybrid Handbook p. 41, §8.1-8.2
- After-tax money you put into your DC account comes back tax-free, but its earnings are taxable.Hybrid Handbook p. 12; p. 41, §8.3
- The 1099-R INPRS mails by January 31 shows the total paid in the year and the taxable and non-taxable amounts. If you didn't fill out withholding forms when you retired, you can do it at any time.Hybrid Handbook p. 41, §8.1-8.2
- Mandatory contributions your employer paid were never taxed, so they aren't tax basis. After-tax DC contributions are reported as non-taxable on the 1099-R. Service bought with your own money can also be tax basis, recovered through the monthly pension.Hybrid Handbook p. 41, §8.3 Taxation of Defined Contributions
- INPRS accepts rollovers of pre-tax money only. It can explain your choices but can't give tax advice, and it urges you to talk to a tax advisor before deciding how to take your DC money.Hybrid Handbook p. 41, §8.3
- If a required minimum distribution starts late, the IRS can charge a 25% penalty, cut to 10% if corrected in time. If you've left employment and haven't applied, INPRS starts RMD payments automatically.Hybrid Handbook p. 44, §10.3 Required Minimum Distribution
Questions
Is my TRF pension taxable?
Yes, as ordinary income, according to INPRS. INPRS can withhold federal, state, county and local tax.
Does Indiana tax my TRF pension?
The INPRS sources we used don't say. Ask a tax adviser or the Indiana Department of Revenue.
Source: Teachers' Retirement Fund Hybrid Plan Member Handbook, Effective 07/01/2025, pp. 12, 26, 28, 36, 41, 44. Also: TRF Hybrid At A Glance p. PDF 2. Last reviewed .