1099-R
Each year MercedCERA provides you with a 1099-R form that contains information on the benefits paid to you by MercedCERA in the prior calendar year. Box 1 of the 1099-R, labeled “Gross Distribution,” contains the total amount of the retirement benefits paid in the prior year. MercedCERA mails 1099-Rs to benefit recipients in late January. If you need a replacement 1099-R please contact MercedCERA, and allow 3-4 days for delivery.
Calculation of the Taxable Amount of Your Benefit
Generally, the full amount of your pension is taxable for general and safety members with the exception of service connected disability benefits. In addition, if you contributed to MercedCERA from after-tax funds during your employment with the County or Court, then these amounts are non-taxable. The rules on recovery are different depending on when you retired and these funds are reported each year on Box 5 of your Form 1099-R.
California State Tax Information for Non-Residents
MercedCERA is required to file 1099-R information to the Internal Revenue Service and Franchise Tax Board. Even though you are a non-resident of California, on occasion you may still be contacted by the Franchise Tax Board requesting tax filings for California since your pension payment is a California source income.
MercedCERA cannot provide legal or tax advise and recommends that members cooperate with the Franchise Tax Board and submit any required documentation to verify residency regarding filing California state taxes.
Service Connected Disability Retirement
If you are receiving a service connected disability retirement from MercedCERA, all or a portion of your benefits may be nontaxable. The Internal Revenue Code provides special tax treatment if you retire due to a service-connected disability.
Tax Withholdings from Pension Payments
At retirement, you should have already completed a form instructing MercedCERA how to withhold taxes from your monthly benefit payment. As a benefit recipient, you have several options regarding your withholding for Federal and State of California taxes.