Taxes on an MTRS pension: no Massachusetts tax, federal tax yes

• Your MTRS pension is exempt from Massachusetts income tax while you live in Massachusetts. Another state may tax it if you move, and MTRS can't withhold state tax.MTRS web page 'Taxation of your benefit'; Ready for Retirement 2026 p. 22 and p. 29
• About 95-98% of the benefit is federally taxable. Only contributions made before 1988 and after-tax service purchases come back tax-free, under the IRS Simplified Method. Without a W-4P, MTRS withholds as if you were single with no allowances.MTRS web page 'Taxation of your benefit'

Federal withholding

When you retire you complete a W-4P for federal withholding. If you don't, MTRS must withhold as if you are single with no withholding allowances. You can ask for no withholding, but then you should make quarterly estimated payments to the IRS. MTRS web page 'Taxation of your benefit'

You can change your federal withholding at any time by sending MTRS a new W-4P. It must reach the main office by the 15th of the month you want the change to start. MTRS web page 'Taxation of your benefit', Changing your federal tax withholding

How the tax-free part is figured

The tax-free part depends on your after-tax contributions, when you made them, and your life expectancy at retirement. Your Notice of Estimated Retirement Benefit lists your after-tax contributions. MTRS web page 'Taxation of your benefit'; Ready for Retirement 2026, p. 22 and p. 29

Your 1099-R

On your 1099-R, Box 5 is the after-tax money you can exclude this year and Box 9b is what you can still exclude in later years. Health premiums withheld appear next to 'Ins.' for itemizing; they are not reported to the IRS. MTRS web page 'Taxation of your benefit', About your 1099-R tax form

You may get more than one 1099-R in a year: for example, the year you turn 59-1/2, if you also get a survivor benefit, or if you got a refund as well as a monthly benefit. Retirees can download their 1099-R in MyTRS. MTRS web page 'Taxation of your benefit', FAQs

In MTRS's words

Your MTRS superannuation allowance is exempt from Massachusetts income tax if you are a Massachusetts resident; another state may tax it if you move (MTRS cannot withhold state tax). It is subject to federal income tax: roughly 95-98% is federally taxable, depending on after-tax money in your account (contributions before 1988 and after-tax service purchases), recovered under the IRS Simplified Method. Without a W-4P, MTRS withholds as single with no allowances. Retirees under 59-1/2 get two 1099-Rs in the year they turn 59-1/2. MTRS web page 'Taxation of your benefit'; Ready for Retirement 2026, p. 22 and p. 29

Health premiums

Retiree health premiums that MTRS deducts from your pension are withheld after tax. Ready for Retirement 2026, p. 9; MTRS web page 'Health insurance'; Introduction to the MTRS (Spring 2026), p. 10

This site can't give tax advice. Ask a tax professional about your own situation, especially if you're moving out of Massachusetts. See Leaving teaching for refunds, and estimate the pension you'd be taxed on in the calculator.

Questions