Your pension is subject to federal income tax and may be subject to state income tax. ORS withholds federal and Michigan tax as you direct and you can change it any time; you pay any tax due to another state or local government. MPSERS benefits are exempt from county, city and other local tax; since Jan. 1, 2012 they are subject to state tax on distribution. Planning Your Retirement (R0613C, 5/26), p. 45, Taxes on your pension; MCL 38.1346(1)-(2)
Pretax DB contributions become taxable when paid out as pension. Your Retirement Plan (R0611C, May 2017; dated), p. 14
When you're paid
- Pensions are paid on the 25th of each month (business day before if a weekend/holiday; December about a week early). Planning Your Retirement (R0613C, 5/26), p. 45, Ongoing pension payments and statements
- The first payment is usually paid in the month of the retirement effective date; the final award letter follows 3 to 6 months after payments begin. Planning Your Retirement (R0613C, 5/26), p. 45, After you apply
What the sources say little about
ORS's booklets say little more about taxes, so this page stays short. They don't give tax rates, Michigan's retirement income deduction rules, or how other states tax a Michigan pension. Your pension amount comes from the pension formula; a survivor option changes what's paid and to whom. For Social Security, see Social Security and MPSERS.
What the sources say
- Your pension is subject to federal income tax and may be subject to state income tax. ORS withholds federal and Michigan tax as you direct; you can change it any time.Planning Your Retirement (R0613C, 5/26), p. 45, Taxes on your pension
- MPSERS benefits are exempt from county, city and other local taxes. Since Jan. 1, 2012 they are subject to state tax when paid.MCL 38.1346(1)-(2)
Questions
Is my MPSERS pension taxed?
It's subject to federal income tax and may be subject to state income tax. ORS withholds federal and Michigan tax as you direct, and you can change your withholding any time.
When is the MPSERS pension paid?
Pensions are paid on the 25th of each month (business day before if a weekend/holiday; December about a week early).
Unofficial guide, not tax advice. Not affiliated with MPSERS or the Office of Retirement Services.
Source: Planning Your Retirement (R0613C), Michigan Office of Retirement Services, Rev. 5/26, pp. 45. Michigan law, 1980 PA 300: MCL 38.1346. Your Retirement Plan (R0611C), May 2017 (dated). Last reviewed .