WRS pensions: exempt in Wyoming, taxed federally

Is a WRS pension taxed in Wyoming?

No state tax, but federal tax applies. Wyoming law exempts WRS benefits and accounts from every Wyoming state, county and city tax. The IRS still counts your monthly pension as taxable income. WRS withholds federal tax if you ask, and posts a Form 1099-R to your online account each year. Handbook p. 21, Income Tax Withholdings; W.S. 9-3-426(a)(i); W.S. 9-3-412(b)

Monthly WRS benefits are taxable income for federal purposes and WRS can withhold federal and state income tax on request; a Form 1099-R is posted to your online account each year. Wyoming law exempts WRS benefits and accounts from any state, county or municipal tax of Wyoming. Contributions paid by the employer under IRC 414(h) are treated as employer contributions for federal tax purposes. Handbook p. 21, Income Tax Withholdings; W.S. 9-3-426(a)(i); W.S. 9-3-412(b)

WRS staff can't give tax advice. For your situation, ask a tax professional or the IRS. Handbook p. 21, Income Tax Withholdings

Rollovers, refunds and buying service

Money moving between retirement plans is where taxes matter before you retire. If you leave teaching, you can take your account as a cash refund or roll it into an IRA or 401(k); see leaving teaching: refund or pension later. If you buy service credit or repay a refund, you can pay with a pre-tax rollover, but not with after-tax or Roth money. The facts below give WRS's exact wording.

No Social Security or Medicare tax

All Public Employee Pension Plan members participate in and pay into Social Security; your WRS service is Social Security-covered employment. Monthly WRS benefits have no Social Security or Medicare withholding. Handbook p. 24, Social Security See WRS and Social Security.

Want to see the pension you'd be paying tax on? Run the WRS calculator.

From the sources

• Your WRS pension is taxable federal income. WRS can withhold tax if you ask and posts a Form 1099-R to your account each year. Wyoming law exempts WRS benefits from any Wyoming state, county or city tax.Handbook p. 21, Income Tax Withholdings; W.S. 9-3-426(a)(i)
• Check with WRSIf you live in another state, that state may tax your WRS pension. The handbook mentions state tax withholding without saying which states. Ask a tax professional.Handbook p. 21, Income Tax Withholdings
• You can pay for a service purchase or a redeposit with a non-taxable rollover from a pre-tax plan such as a 401(k), 403(b), 401(a), 457(b) or traditional IRA, or with personal funds. After-tax or Roth money can't be used.Handbook p. 10, Increasing Your Pension Benefit via a Service Purchase; p. 12, Redeposits
• If you leave before retiring, you can take your account as a cash refund or roll it over into an eligible retirement account such as an IRA or 401(k). WRS can't take service credit or pensions from other plans, but you may be able to roll balances from a former employer's 401(k), 403(b) or 457(b) into the WRS 457(b) Plan.Handbook p. 13, Retirement Accounts with Non-WRS Employers; pp. 13-14, Leaving Employment Before Retirement Age

Questions

Run your own numbers →