What are the tax consequences if I choose to take a refund of my contribution account balance?
First, the Division of Retirement and Benefits and the State of Alaska do not provide tax advice. Each member’s tax situation is unique and you must consider the affect on your individual taxes. You should consult with the Internal Revenue Service (IRS) and a consultant as you deem necessary. Contributions placed in the PERS before July 1, 1986, is “post-tax” contributions. The contributions have already been taxed and you should owe no further tax on them. The interest earnings from these periods are still subject to income taxes. Contributions and interest placed in the PERS on or after July 1, 1986, is “pretax” contributions. These contributions have not been taxed previously. Therefore, both the contributions and interest earned on these amounts are subject to income tax. In January following the year in which a refund is made, members will receive a 1099R informational return which indicates the amount of the taxable and nontaxable portions. For the “pretax” contributions, if you
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