Generally, your retirement benefit is considered taxable for both Federal and state income tax purposes. However, in some cases, all or a portion of your benefit may be excluded from your gross income for federal and/or state income taxes.
You are required to report your SBCERA income for income taxes in the state where you have your permanent place of residency. Therefore, if you do not live in California permanently, you would not be responsible for California income taxes. You will be required, however, to report your SBCERA income for Federal income tax purposes regardless of where you live.
Also, if you have ever made after-tax contributions to SBCERA, such as paying for a service credit purchase with after-tax money, a portion of your benefit may fall under the Safe Harbor laws and would not be considered taxable income.
My Tax Withholding
You can choose whether you want to have Federal and/or state taxes withheld from your SBCERA benefit and at what rate including:
- 1. No Withholding: You may choose not to withhold any taxes from your SBCERA benefit.
- 2. Specific Dollar Amount: Request a specific dollar amount to be withheld from your SBCERA benefit.
- 3. Amount Based on Tax Tables: Select to have an amount determined each year based on the current IRS tax withholding tables, which considers your income, filing status and exemptions to determine the amount to be withheld.
SBCERA cannot make recommendations regarding your tax withholding elections. SBCERA cannot withhold state taxes for any state other than California. You are responsible for reporting your income and paying the taxes, if any, for the state you live in.
Changing My Withholding
You can revoke or change your tax withholding election at any time by completing a new Tax Withholding Election Form. You may want to check with your tax advisor each year to see if you need to adjust your withholding. If you have any questions about this form, please contact SBCERA.
Reporting My Income – My Form 1099-R
Similar to the W-2 forms you received while working, SBCERA will send you a Form 1099-R each year reporting your SBCERA income for the year. The Form 1099-R reports the total income you received from SBCERA and the amount of Federal and/or state taxes withheld, if any. You can also view, download and print 1099-Rs online in MemberDirect for each benefit type you have received since tax year 2005.
Form 1099-Rs are sent no later than January 31st of each year. If you do not receive yours within a reasonable amount of time after that date, contact SBCERA. Typically, we ask members to wait until at least February 15th to receive their 1099-R.
If you do not receive your Form 1099-R or there appears to be an error, you can complete and mail a Request for 1099-R Duplicate or Correction form to SBCERA or contact SBCERA, if necessary.
For more information, read SBCERA’s Form 1099-R Frequently Asked Questions.
This information is provided for informational purposes only. If you have questions regarding your tax situation, future tax obligation or wish to seek tax advice, SBCERA encourages you to contact a qualified tax advisor.