BackDROP Estimate Decrease

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Is it true that is you work past your normal retirement (80 & out) that your pension amount decreases? I noticed a decrease since last year.
If you are referring to your retirement benefit estimates including a BackDROP estimate that has decreased, we have addressed this question in an article on our website:

Generally, the longer you work, the higher your benefit and BackDROP. However, there are cases where working longer could decrease your BackDROP lump sum. The reason for the decrease could be due to a number of factors, among them, a lower COLA rate the year you retire as opposed to the previous year, or less or no temporary benefit calculated into the distribution if you are over 62 and are electing the MSEP 2000.

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House Bill 1780

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How would HB 1780 change the benefit formula and would it apply to current retires?
As it is currently written, HB 1780 would only affect members of the Public School Retirement System (PSRS) who have 31 years or more of service. Current or future MOSERS retirees would not be affected by this proposed change. As always, we will keep our members up to date through our website, newsletters and social media if there is any news on retirement-related legislation. Print Friendly and PDF

Taxes & Retirement Benefit

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I am thinking about retiring at the end of the year (2016). Will I pay taxes on my state retirement?
It depends.  Retirement benefits, which may include the temporary benefit, are considered taxable income for individual tax purposes. Missouri income tax and federal income tax can be withheld from your monthly retirement payments.

However, in a recent RetireeNews article we described the public pension exemption. Depending on a variety of factors (including, but not limited to, income, filing status, and age) you may be able to deduct some or all of your public retirement benefit on your Missouri tax return, to the extent the amounts are included in your federal adjusted gross income. MOSERS recommends you contact the Department of Revenue or a qualified tax advisor for additional information or answers to your specific questions about the public pension exemption.

At retirement, you may specify your federal and state tax withholding preferences by completing a Substitute W4-P form, which you can do by logging into your secure Member Homepage on MOSERS’ website. MOSERS has a federal tax calculator on our website to help estimate your withholdings:

MOSERS will withhold state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, we recommend you contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit.

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Retiree Premiums

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Are retiree health insurance premiums withheld and paid before or after payroll taxes are calculated? The reason I ask is I am trying to determine if the premiums are a qualified health insurance premium expense for Missouri taxes (form MO-A).
Medical premiums are a post-tax deduction for retirees. Federal and state taxes are calculated based on the gross amount paid by MOSERS.

We have a helpful guide to understanding the 1099-R form on our website. If you have specific questions on medical premiums, you will need to contact your health insurance provider directly. We also suggest you contact your tax professional with questions about your specific situation, since we cannot give tax advice.

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Oil Prices & COLA Rate

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What does decreasing oil prices have to do with a COLA increase? No elaboration on this comment, it is related to stocks?
The price of gasoline/oil is one factor in the consumer price index (CPI).

According to Missouri State Law, cost of living adjustments (COLAs) for MOSERS retirees are to be based on the Consumer Price Index (CPI). We compare the average Consumer Price Index (CPI) for the calendar year just completed (2015) to the average CPI from the prior year (2014) to determine the percentage change between the two years. COLAs are based on 80% of the percentage increase in the average CPI from one year to the next.

The CPI is defined as a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services by the Bureau of Labor Statistics (BLS). One of the categories is transportation which includes the price of gasoline.  As we have all witnessed, the average price of gasoline in 2015 was lower than it was in 2014.
It says  on the BLS website that the CPI does not include investment items, such as stocks, bonds, real estate, and life insurance. (These items relate to savings and not to day-to-day consumption expenses.)

There is very helpful information on the Bureau of Labor Statistics’ Frequently Asked Questions web page and on MOSERS’ COLA page. Print Friendly and PDF

Reemployment After Retirement

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Can you clarify which state retirement systems a Moser's retiree can work for full-time and still draw their retirement?
Besides MU, can a retiree work for Dept of Conservation? A state funded position at local courts, etc.
As a general state employee, your MOSERS retirement benefit would be stopped if you retire and later return to work in a benefit-eligible position covered by MOSERS or MPERS (MoDot & Patrol Employees’ Retirement System).  MOSERS administers benefits for most state agencies. See our website for a complete list. Your employer determines if the position is benefit-eligible, so if you have a question about whether or not a position will affect your MOSERS retirement benefit, we advise you to check with your potential employer.

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BackDROP & Deferred Comp

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Yes, you can put all of your BackDROP distribution in your deferred comp account.  When you retire, you will be asked if you want to elect BackDROP (if eligible), and, if so, how you want to receive that distribution. The payment options are:

1. Cash Option
This distribution will be paid directly to you in one lump-sum payment at retirement or in three annual installments (less the 20% income tax MOSERS is required by the IRS to withhold).

2. Rollover Option
This distribution will be paid directly to the State of Missouri Deferred Compensation Plan (which offers a self-directed brokerage account, custom target date funds, an actively managed asset allocation fund, and a stable income option), a traditional IRA, or another eligible employer plan.

3. Cash & Rollover Option
If you elect this option, you may specify the amount of a tax-deferred distribution to be paid directly to your State of Missouri Deferred Compensation Plan, a traditional IRA, or another eligible employer plan. The remaining balance will be paid to you in cash (less the 20% income tax MOSERS is required by the IRS to withhold).

Here is how you can access the money:  BackDROP funds that are rolled to the deferred compensation plan will be placed in the 401(a) source of your account. If you’re 55 or older the year you separate from service (terminate employment), then you can access 401(a) funds without paying a 10% penalty (the Plan is required to withhold 20% of each payment for federal income taxes). If you’re younger than 55 when you retire, you still have access to 401(a) assets, but you must pay the additional 10% penalty for any distribution that occurs before age 59 ½. As a reminder, you will have penalty-free access to the assets in your 457 source (these are monies you have contributed to the plan throughout your career), at any age once you separate from service. After separation from service, you can withdraw funds online in Account Access at or by calling the Plan Information Line at 800-392-0925.

For a detailed explanation of the payment methods and tax consequences, please review our Special Tax Notice. More information on the BackDROP is also available in the BackDROP for General State Employees brochure on MOSERS’ website. We recommend you contact a tax consultant or financial advisor before electing a payment method.

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