Federal Income Tax:
Monthly benefits from KERS, CERS, and SPRS are subject to federal income tax. For members who have made taxed contributions to KPPA and elect to receive monthly benefits, current Internal Revenue Service regulations provide that the amount of after-tax dollars in the account be recovered by making a portion of each monthly benefit non-taxable. The non-taxable portion of each monthly benefit is referred to as the "monthly exclusion" and represents those contributions paid to KPPA prior to August 1, 1982, and any service purchases or re-contributions paid with taxed income.
The monthly exclusion, which is a specific dollar amount, remains the same and is not affected by increases in the recipient’s retirement benefit. The monthly exclusion will continue until there are no remaining payments on the account or until the total of all monthly exclusions on the account equals the member’s taxed contributions.
Box 5 of the 1099-R, sent annually to recipients of retirement benefits, reflects the total of all monthly exclusions applied to a recipient’s benefits for the year.
Federal Income Tax Withholding:
You have the right to choose whether you want federal income tax withheld from your monthly retirement benefit payments. You may want to review your decision on withholdings periodically. From year to year, the amount of federal tax being withheld from your benefit payments (if any) may change due to changes in the withholding tables provided by the IRS. Your original withholding choice will remain in effect until you file new tax withholding forms with KPPA. Complete
Form 6017 - Federal Income Tax Withholding Preference or change your withholdings online using our Self Service site. Your decision on income tax withholding is an important one, and you should discuss it with a qualified tax advisor.
The Tax Reform Act of 1986 requires tax withholding from benefit payments if you are a U.S. citizen receiving your benefits in a foreign country. If you are not a U.S. citizen and are living in a foreign country, different income tax rules apply.
Kentucky State Income Tax:
All benefits attributable to service earned on or before December 31, 1997, are exempt from Kentucky income tax. The portion of the member’s benefits earned January 1, 1998 and after is subject to Kentucky income tax; however this income may be excluded up to a certain amount. See Schedule P in the Kentucky Income Tax forms for the exclusion amount and calculation. Retirement credit for unused sick leave is treated as being earned at the time of retirement.
Cost of Living Adjustments (COLAs):
All COLAs for KPPA benefit recipients must be enacted by the General Assembly. The requirements for providing a COLA stipulate it may only be paid if the funding level in the particular system in which the COLA is being provided is greater than 100% and the COLA payment will not reduce the funding level below 100%, or if the legislature prefunds the COLA. It is possible for recipients of one KPPA system to receive a COLA while recipients in another KPPA system may not.
For more information about COLAs, please visit Cost of Living Adjustments (COLAs)
Lost or Stolen Check:
In the event your check is lost or stolen, contact KPPA immediately and explain what happened. Your check can be replaced if it is destroyed, lost, or stolen, but the procedure may take up to four weeks.
Change of Address:
It is important to keep your address current with KPPA. Doing so will ensure retirement checks and other information related to your account are delivered to you on time. If you need to change your address, please follow the procedures listed below:
Check with the Post Office: Be sure that your correct address is on file at the U.S. Post Office. Each month, KPPA updates the address on file for you with the U.S. Post Office through the National Change of Address (NCOA) system. If the correct address is not on file with the Post Office, your address on file at KPPA may be replaced with an incorrect address. If you receive your check by mail, the Post Office will not forward your check. Failure to update your address with KPPA will result in a delay in receiving your check.
Complete and file a Form 2040: Complete a
Form 2040, Change of Address Notification, and file it with KPPA.
Log in to Self Service: You can easily update your address on our
Self Service website.
Speak with a KPPA counselor on the phone: Contact our office toll free at 1-800-928-4646, or locally at 502-696-8800. After you provide your KPPA-issued Personal Identification Number (PIN) and KPPA Member ID, a counselor can update your address for you.
Check with your employer: Make sure your current employer if currently active or if you are retired / re-employed has your correct address.
Information from KPPA:
Following your retirement, you will be notified via a periodic newsletter of any changes made in the retirement statutes or federal law that may impact your benefits. The KPPA website will also be regularly updated with important information, so please be sure to check back regularly. In January of each year we will issue a 1099-R providing the information you need to file your tax return. You do not need to request this information; your 1099-R will automatically be issued to you by the end of January if you received benefits during the previous calendar year. You can view this information online as soon as it is available by checking our
Self Service website.
Power of Attorney:
If you execute a Power of Attorney empowering another person to act on your behalf as your attorney-in-fact, you should submit a copy of the Power of Attorney to KPPA if you wish for your attorney-in-fact to act on your behalf with regard to KPPA matters. If you want your attorney-in-fact to be able to make health care transactions on your behalf, name beneficiaries, or change your beneficiary designation, you should specifically grant your attorney-in-fact that power in your Power of Attorney.