How Taxes Are Applied to

TMRS Benefits

2007 Annual Training Seminar

2007, Texas Municipal Retirement System.

Taxes Are Applied to Income: Refunds

PLSDs

Rollovers(tax-deferred)

Monthly retirement benefits

TMRS is a Qualified, Tax-Deferred Governmental Retirement System

What does “qualified” mean?

Tax-deferred — NOT TAX FREE.

What does “Employer pick-up” mean?

How Are Income Taxes Handled in Retirement?

Pre-1984

Post-1983 — non-payroll contributions, interest, and employer funds

Retiree is in control

Refunds and Partial Lump Sum Distributions (PLSDs)

There is tax liability if you don’t roll over

Trustee-to-trustee rollovers

Rollovers to 457 accounts — you don’t lose the tax liability

Rollovers into TMRS

When can TMRS accept a rollover?

Where can the money come from?

Taxable Status of Disability Retirement

Why won’t TMRS code a retiree’s 1099R so the IRS treats it as a disability retirement for tax purposes?

The elusive “code 3” issue!

Tax Saver Credit

What is it?

How does this help me?

Supplemental Death Benefits

Is the supplemental death benefit taxable?

Does the value of this fringe benefit have to be reported as taxable wages to an employee while they are working?

Pension Protection Act of 2006

Made permanent retirement plan changes enacted in 2001 that were set to expire after 2010.

Made major changes to funding rules for single and multiemployer plans (not public plans).

Liberalized retirement plan distribution and rollover rules.

Clarified the application of age discrimination rules on hybrid retirement plans.

HELPS Provision TMRS begins participating in the program in

January 2008. Retired public safety officers may pay for their

health insurance coverage from their monthly retirement annuity.

TMRS makes direct payment to health insurance provider from retiree’s annuity.

Up to $3,000 of the payment may be deducted on the retired officer’s tax return per year.

Retirees who were public safety officers – law enforcement, firefighter, or EMS – are eligible.

Retiree’s employing city must verify status as a retired public safety employee.

Call TMRS if you need more information or to request the HELPS forms.

HELPS Provision (cont.)

Questions & Answers

HOW TO CONTACT TMRS:Toll-free: 800-924-8677Web: www.TMRS.comE-mail: phonecenter@tmrs.com