TAXES -- TIER I & II (ARTICLE II & IIA)
- Pension benefits are non-taxable for members who retire on Accidental Disability (Line-of-Duty) prior to January 1, 2009. Effective January 1, 2009, The New York Police Pension Fund must report certain monies that are considered taxable as they relate to Accident Disability Pensions. This is as a result of an agreement that the City of New York has entered into with the Internal Revenue Service. Below is a synopsis of the areas affected by this agreement:
FOR ALL MEMBERS AT RETIREMENT (effective January 1, 2009)
10% of contributions in a member’s account that must remain by law, will be subject to tax. If you decide to leave in additional funds, these funds will also be taxed. The fund recommends, in Accidental Disability cases, that the member withdraw all but your required 10%.
FOR MEMBERS WITH MORE THAN 20 YEARS OF SERVICE (effective January 1, 2009)
In addition to the above, the full 1/60th value and the Increased Take Home Pay (ITHP) value you accumulate beyond 20 years of service will be subject to tax.
Members will be required to fill out W-4 forms during retirement processing to have deductions made from their pensions. Members may wish to check with their tax preparers for minimum taxable reporting requirements.
- All other pensions are subject to Federal Income Tax regulations but are exempt from New York City, New York State, and Social Security taxes.
- Members will be required to arrange for Federal Income Taxes to be withheld from their pensions.
- Members are advised to research the tax laws outside New York State before deciding to relocate. There is a list of different state tax policies circulated among members, but states frequently change tax policies.
- Members are strongly advised not to make a relocation decision based on outdated information.