Are retirement benefits taxed?
Retirement benefits are generally subject to federal and state income taxes. A portion of each benefit payment may be excluded from taxable income if you have funds in the system that were contributed on an after-tax basis. You can have federal and state taxes withheld from your benefit through payroll deduction by completing a Request for Income Tax Withholding form VRS-15 61kb. If you do not file this form, VRS is required by law to withhold taxes from your monthly benefit based on a status of married claiming three allowances for federal and married with zero allowances for state income taxes. VRS will mail you a Yearly Tax Withholding Form (1099-R) each January. If your basic group life insurance is more than $50,000, you will also receive a W-2 form showing the income tax and FICA withheld on the value of that insurance coverage.
