RETIREE UPDATE
FOR RETIREES AND BENEFIT RECIPIENTS OF COLORADO PERA
Yeulit/Thinkstock
DECEMBER 2014
Changes to Your Benefit
Inside
2
Understanding Your
1099-R
4
July Annual
Increases
Look for two possible changes beginning with your December 2014
Colorado PERA benefit:
2015 Premiums
Your check will reflect your 2015 PERACare premiums. Depending upon
the plan(s) in which you are enrolled, you will see that some premiums
went up, some went down, and some stayed the same. If PERA deducts
your Medicare Part B premium, the base premium of $104.90 is not
changing for 2015.
IRMAA
If you are enrolled in a PERACare health care plan, you may be subject
to Medicare’s Income Related Monthly Adjustment Amount (IRMAA) in
2015. The IRMAA will apply if your income was over $85,000 ($170,000
for a couple) in 2013. Social Security will send you a letter notifying you
if you are subject to the IRMAA. There are two types of IRMAAs:
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Watch for 2015
PERACare
Information
6
Are Your Taxes
in Order?
»» Medicare Part B: If PERA is deducting your Medicare Part B premiums
from your PERA benefit, Social Security will also notify PERA of your
Part B IRMAA and PERA will deduct it along with your Part B premium.
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Board of Trustees
Election Slated
»» Medicare Part D: Medicare does not allow PERA to deduct Part D
IRMAAs, so if you receive a bill from Medicare for a Part D IRMAA, you
must pay the Part D IRMAA to Medicare promptly.
PERA Office Closures
Colorado PERA offices will be closed on the following days:
December
25 and 26,
2014
January
1 and 2,
2015
January 19,
2015
1099-R Information
Understanding Your 1099-R
Year-end tax information on your IRS Form 1099-R will hit your mailbox at the end
of January. The following information may be printed on your 1099-R.
1099-R Mailing
Information
»» PERA mails each benefit
recipient a 1099-R by
January 31.
»» Please allow five
business days after
January 31 for postal
delivery before calling
PERA if you have not
received your 1099-R.
»» Your 1099-R will be sent
to your home address on
file at PERA.
»» To have your 1099-R
forwarded to another
address, PERA must
receive your signed
request in writing by
January 5, 2015.
»» You can review your
1099-R online after
January 31 by logging
on to your PERA account
using your User ID and
password and selecting
the “Inquiry” drop-down
option.
Payer’s federal identification number
PERA’s tax identification number
(84-6220742) with the Internal
Revenue Service (IRS).
Recipient’s identification number
The last four digits of your Social Security
number will appear.
Box 1—Gross distribution
Total benefit amount paid to you by PERA
in the tax year noted.
Box 2a—Taxable amount
Total taxable benefits you received from
PERA in the tax year noted. If you have
previously taxed contributions in your
PERA account (see page 7), PERA uses
a cost-recovery method recognized by
the IRS to amortize the nontaxable dollar
amount each year. If you do not have any
previously taxed contributions, your entire
benefit amount is taxable.
Box 2b—Taxable amount not
determined/Total distribution
Unless you took a withdrawal/refund
of your PERA member contribution
account, which closed out your PERA
account from any future benefits being
paid to you, these boxes will be blank. If
you have an “X” in the “Taxable amount
not determined” box and Box 2a is blank,
you will need to determine the taxable
portion of your annual benefit.
Box 3—Capital gain (included in Box 2a)
This box will have a dollar amount
reported if you were born before
January 2, 1936, and you took a
withdrawal/refund of your PERA
account instead of choosing a
monthly benefit.
Box 4—Federal income tax withheld
Federal income tax withheld from your
PERA benefit in the tax year noted.
2
Box 5—Employee contributions/
Designated Roth contributions or
insurance premiums
The nontaxable amount of benefits
you received in the tax year noted (the
difference between Box 1 and Box 2a).
If you have previously taxed
contributions in your PERA account,
PERA uses a cost-recovery method
recognized by the IRS to amortize the
nontaxable dollar amount each year
and reports it in Box 5. Do not report
this amount on your tax returns. This
is not the premiums you paid to PERA
for health care or life insurance. If you
need the amount of your insurance
premiums, refer to your year-end benefit
check or EFT statement. If Box 5 is blank
and there is an “X” in Box 2b “Taxable
amount not determined,” you must
determine the nontaxable portion of
your annual benefit. In cases where the
benefit recipient passed away during the
reporting year and no future monthly
benefits are payable, Box 5 may also
include the balance of any previously
taxed contributions not recovered
through the cost-recovery method.
Box 6—Net unrealized appreciation in
employer’s securities
Does not apply.
Box 7—Distribution code(s)
“2” If you are receiving a monthly
PERA retirement benefit; you are
younger than age 59½; and it is
not a disability retirement.
“3” If you are receiving a disability
retirement benefit.
“4” If you are receiving a monthly
PERA benefit based on the
death of a retiree or active PERA
member. This code also applies
to a refund of contributions if
the retiree and cobeneficiary (if applicable)
died before all of the contributions
were distributed and the balance of the
contributions go to the named beneficiary.
“4G” Refund of contributions if the retiree and
cobeneficiary (if applicable) died before all
of the contributions were distributed and the
balance of the contributions are rolled over
to a qualified account.
“7” If you are receiving a monthly PERA
retirement benefit; you are age 59½ and
over; and it is not a disability retirement.
Box 8—Other
Does not apply.
Box 9a—Your percentage of total distribution
Does not apply.
Box 9b—Total employee contributions
The total tax-paid contributions in the member
account at the time of retirement. This will only
print for the first year of retirement. This is the
figure used to calculate the taxable portion of the
benefit based on the IRS’s “Simplified Method”
(prorates the previously taxed dollars of your
benefit over a specific number of payments as
warranted by the IRS; for more information on this
rule, contact the IRS for a copy of its publication
575). See Box 5 description for additional
information.
Box 10—Amount allocable to IRR within 5 years
Does not apply.
Box 11—First year of designated Roth contributions
Does not apply.
Boxes 12—State tax withheld
Colorado state tax withheld from your benefit in the
tax year noted.
Box 13—State/Payer’s state no.
The state in which income tax was withheld. (PERA
only withholds state taxes for Colorado.) Payer’s
state no. is used by PERA for filing purposes with
the State Department of Revenue.
Boxes 14—17
Do not apply.
Account number
This is your PERA-assigned account number which
appears on your benefit statement or benefit
check as well as other correspondence you may
receive from PERA.
Denver Public Schools Disability Retirees
If you turned age 65 in 2014 and qualified for a recalculation to regular retirement, you will receive two
1099-Rs this year. PERA must change the distribution code in Box 7 when you turn age 65 and change
status from a disability retiree (distribution code 3) to a regular retiree (distribution code 7).
3
2015 Benefit Check
Mailing and Direct
Deposit Dates
The following are the dates benefit
checks will be mailed and direct
deposit accounts will be credited
in 2015:
July Annual Increases
Colorado PERA will know the investment return for 2014 in
late spring/early summer 2015 when the audited financial
results are available. These results help determine the annual
increase paid to many retirees at the end of July.
If you are eligible for an annual increase, the amount of your
increase is based on the following:
For retirees in the PERA benefit structure who began
membership before January 1, 2007, and all retirees in
the DPS benefit structure
»» January 30
»» February 27
The amount of the annual increase will be 2 percent per year
unless PERA has a rate of return that is less than zero percent,
at which point the annual increase for the following three
years will be the lesser of 2 percent or the average of the
monthly CPI-W amounts for the preceding calendar year.
»» March 31
»» April 30
»» May 29
»» June 30
For retirees in the PERA benefit structure who began
membership on or after January 1, 2007
»» July 31
The amount of the annual increase will be the lesser of
2 percent or the average of the monthly CPI-W amounts
for the preceding calendar year. In no case can the sum of
the annual increases paid to benefit recipients of a division
exceed 10 percent of the divisional annual increase reserve.
»» August 31
»» September 30
»» October 30
»» November 30
»» December 31
Full details on the annual increase, including eligibility,
are available on PERA’s Annual Increases fact sheet,
which can be found on the PERA website.
UroshPetrovic/ThinkstockThinkstock
Exemption for Survivors of Public Safety Officers
4
If you are receiving a survivor benefit due to the death of a public safety officer
who was killed in the line of duty, your benefit may be exempt from federal
income tax. Consult a tax adviser to determine if you qualify for this exemption
under Section 101(h) of the Internal Revenue Code.
If you believe you qualify, please contact Colorado PERA so that your
withholding and tax reporting may be adjusted. PERA may require you to
submit documentation to demonstrate that you qualify.
PERACare News
Watch for 2015 PERACare Information
Check your mailbox for 2015 PERACare plan information from carriers in the
coming weeks. Please review the information below for each plan in which
you participate. If you receive a new ID card from your plan, use it beginning
January 1, 2015.
Anthem Blue Cross & Blue Shield
»» New enrollees will receive ID cards by late December.
»» Benefit booklets will be available in early January.
Cigna Dental
»» New HMO enrollees will receive ID cards in mid-December.
If you did not
change your
PERACare
plan(s) for 2015,
you may not
automatically
receive new ID
cards or benefit
booklets.
»» New HMO enrollees will receive benefit information.
»» PPO ID cards are not issued, but new PPO enrollees will receive a letter from
Cigna instructing them on how to access care and obtain an ID number.
»» New PPO enrollees will receive a coverage booklet in early January.
Delta Dental
»» ID cards are not issued or needed. Tell your dentist that you have Delta Dental
and the dentist’s office will verify your coverage online with Delta Dental.
»» New enrollees will receive benefit booklets.
Express Scripts
»» New enrollees will receive ID cards and benefit information in late December.
»» Benefit information was mailed to existing Medicare enrollees in September.
Kaiser Permanente
»» New enrollees will receive ID cards.
»» The Evidence of Coverage (benefit booklet) for:
•
Existing Medicare members was mailed in October.
•
New Medicare members will mail in early January.
•
Pre-Medicare members will be available online in January.
If you need care
after January 1
and have not yet
received your ID
card, your provider
can verify coverage
through your
plan’s toll-free
number. See the
PERA website or
the PERACare 2015
Health Program
booklets for phone
numbers.
Rocky Mountain Health Plans
»» ID cards will be issued to all enrollees in December.
»» Benefit booklets were mailed to existing Medicare plan members in October.
»» Benefit booklets will be mailed to new enrollees in late December.
UnitedHealthcare Medicare Plan
»» ID cards will be issued to all enrollees in December.
»» Benefit booklets were mailed to existing Medicare plan members in October.
»» Benefit booklets will be mailed to new enrollees in late December.
VSP
»» VSP does not issue ID cards or mail benefit booklets.
»» Tell your eye doctor that you have VSP and the doctor’s office will verify your
coverage online with VSP.
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Tax Information
Are Your Taxes in Order?
With 2015 just around the corner, many
retirees want to know how to adjust
their federal tax withholding status.
The following information will help
you understand how federal and state
income tax rules affect your Colorado
PERA benefit.
Federal Income Tax—PERA Benefit
Structure
»» Unless your account includes aftertax contributions, your entire benefit is
reported as taxable income.
»» PERA determines the taxable amount of your benefit using IRS formulas and reports that
taxable amount to you on IRS Form 1099-R.
»» If you are under age 65 and totally disabled, you may be eligible for a special federal
income tax credit (review IRS Schedule R and Publication 524).
Federal Income Tax—DPS Benefit Structure
»» If you retired before July 1, 1986, and used the Three-Year Recovery Rule, your entire
benefit each year is taxable.
»» If you retired before January 1, 1987, and did not use the Three-Year Recovery Rule, a
fixed portion of your annual benefit is tax-free for your lifetime.
»» If you retired after 1986, retirement benefits you receive after you recover your tax-paid
contributions are fully taxable.
»» If you retired prior to January 1, 1991, the taxable portion of your benefit was not
calculated by DPSRS.
»» For retirements effective January 1, 1991, and later, the taxable portion of your benefit
was calculated using the Simplified General Rule. It is possible that there was not enough
information in your file to calculate the taxable portion, in which case your 1099-R will
state, “Taxable amount not determined.”
Federal Withholding
If you did not provide PERA with withholding instructions, PERA was required to withhold
federal income tax if your gross taxable monthly benefit was $1,692 or more in 2014.
(The required federal withholding was at a rate for a married individual claiming three
exemptions.)
»» Your December PERA benefit statement includes your current federal withholding status.
»» Even if PERA did not withhold taxes for you, you still may owe income tax and should
complete the appropriate federal tax forms.
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Colorado State Income Tax
»» Colorado residents who are age 55 through 64 can take advantage of
a Colorado state income tax exclusion for up to $20,000 of pension
income received each year; Colorado residents who are age 65 and
over have a $24,000 pension income exclusion. The retiree’s age on
December 31 is used to determine the exclusion amount for that year.
Pension income includes PERA benefits and any other retirement
income you may receive.
»» Review the Colorado Department of Revenue’s publication, FYI—For
Your Information: Subtraction from Income for Recipients of PERA or
Denver Public Schools Retirement Benefits if you made contributions:
Take Action
1 E
xamine the amount
of your income tax
withholding to make
sure you have enough
withheld.
2
Check with your state’s
revenue agency for
details about any state
income taxes you may
owe if you live outside
of Colorado. (PERA does
not withhold income
tax for states other than
Colorado.)
3
Change your federal
or Colorado state
withholding using the
Withholding Preference
Form in the Taxes on
PERA Benefits brochure
or online using your
User ID and password.
PERA must receive your
form by the 15th of the
month in order for it to
be effective for that
month's benefit.
4
Contact the Colorado
Department of Revenue
(303-238-7378 or
www.taxcolorado.com)
or consult with a tax
professional if you
have specific questions
regarding your state
income tax return.
••Under the PERA benefit structure between July 1, 1984, and
December 31, 1986.
••Under the DPS benefit structure between January 1, 1986, and
December 31, 1986.
»» If you move outside of Colorado and have previously requested to have
Colorado state income tax withheld from your benefit payment, you
must instruct PERA to stop this withholding if it no longer applies. This
withholding will not be removed automatically.
This article is not intended as tax advice and specific questions about
your taxes should be directed to the IRS, the Colorado Department of
Revenue, or your personal tax consultant.
After-Tax Contributions
If your account includes any of the following aftertax income, you will not pay taxes on that portion of
your benefit:
»» PERA contributions made before July 1, 1984, in
the PERA benefit structure. (See Box 5 information
on page 2.)
»» DPSRS contributions made before January 1, 1986,
in the DPS benefit structure.
»» After-tax dollars used to purchase service credit.
7
PRESORTED
STANDARD
U.S. POSTAGE
PAID
DENVER, CO
PERMIT NO. 45
PO Box 5800, Denver, Colorado 80217-5800
1-800-759-7372 • www.copera.org
Board of Trustees Election Slated–Candidates Sought
In May 2015, Colorado PERA will hold an election for
one Retiree position on the Board of Trustees. The
retiree must be from the State, Local Government,
or Judicial Division.
Candidacy packets may be obtained by writing to:
Colorado PERA
Internal Audit Division
1301 Pennsylvania Street
Denver, CO 80203-5011
To be placed on the ballot, a candidate must fulfill
the requirements explained in the candidacy packet.
Requests for candidacy packets should include
the name, PERA Division of membership, mailing
address, daytime telephone number, and signature
of the candidate. Candidates will be subject to a
background check. Retirees of the State Division
who are interested in being a candidate for the
Retiree position must also indicate whether they are
a participant in the PERA Defined Benefit or Defined
Contribution Plan.
5/40 (REV 12-14) 95M
Ballots will
be mailed in
early May to
retirees of the
State, Local
Government,
and Judicial
Divisions.
Returned
ballots must be
postmarked by
May 31, 2015.
PERA will hold elections for the seat currently held by
Timothy M. O’Brien, a retiree from the State Division,
whose term expires June 30, 2015. The position is for
a four-year term.
The Board of Trustees meets at least five times per
year and is responsible for adopting the rules and
policies for the administration of PERA. Elected Board
members serve without pay, but are reimbursed for
necessary expenses.