Increasing your tax withholdings
Many retirees, especially early in their retirement, find that they need to increase the amount of tax (tax withholdings) that are deducted from their monthly pension.
DRS is often asked: Is my pension taxed?
If your contributions were made before they were taxed, for example non-Roth contributions to the Deferred Compensation Program, then yes, federal taxes are withheld from your pension check.
We often get requests at DRS for this, and while it’s not a difficult change to make, it’s not as simple as just putting a new percentage or dollar amount on the retiree’s W4P. The IRS redesigned the W4P form a few years ago so the look and feel of the form may be different than the last time a retiree completed one.
“To make a change, you will need to understand how the W4P works,” says DRS Retirement Readiness Director Seth Miller. “The calculator tool we have is really helpful. All you really need to do is add an amount to section 4c on the form to get to what you need if the standard withholdings is not enough.”
Your new W4P will replace your old withholding selections, so make sure to use the calculator tool on the DRS website.
If you would like help with the basics of increasing tax withholdings, check out this video on the DRS website.
For more information, visit the IRS Information page on the DRS website.
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Once you’ve reached the required age and years of service for your plan, you can apply for your pension retirement through DRS.
