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Discovering Retirement (Back to Contents)

A Closer Look at Your NYSTRS Benefits

Retired Person Gardening"Life is no brief candle to me. It is a sort of splendid torch which I have got a hold of for the moment, and I want to make it burn brightly as possible before handing it on to future generations."
George Bernard Shaw

Your NYSTRS benefit is likely the foundation of your retirement income. The choice you made at retirement – the Maximum benefit or a reduced payment in the form of an option – is yours for life.

In this section, we will look at some of the factors that may affect your current and future benefit payments, such as taxes, deductions and cost-of-living adjustments. We'll also show you how to easily obtain the monthly and year-to-date amounts of your payments.

First, let's take a look at other sources of information available to you, beyond this publication.

Getting NYSTRS Information

We are committed to providing services that meet your changing needs throughout retirement. We remind you of these services and keep you informed on other important issues through a variety of resources.

Retiree Newsletter
Our retiree newsletter, Resource, keeps you updated on legislative changes, System news, and other related information. It is also available online and on audio tape for the sight impaired.

Retired Member Profile
This personalized document, mailed to you annually, includes your date of retirement, benefit option selected and, if applicable, designated beneficiary(ies). A breakdown of gross monthly income and your net payment amount are also included.

Our website at www.nystrs.org offers the latest System news, forms, and publications. A MyNYSTRS account allows you to review your benefit payment information and beneficiaries.

Call our 24-hour Hotline at (800) 782-0289 to request forms and publications, learn the status of legislation, hear the latest earnings in retirement limits, and obtain other pertinent information.

Options and Beneficiaries

Whether you can change your beneficiary designation in retirement depends on what option you selected. You can change your beneficiary only if (1) you are a Tier 2-6 member with a Paragraph 2 in-service death benefit that was in effect at retirement, or (2) you selected a lump sum or guaranteed period option, providing the coverage is still in effect.

To change your beneficiary, you must file a properly completed and notarized Designation of Beneficiary form (NET-11.4) with the System. You can also obtain the form by calling the NYSTRS Hotline at (800) 782-0289.

If you selected the Maximum at retirement, there is no payment to a beneficiary. If you selected a survivor or pop-up option, which provides a lifetime payment to one beneficiary only, you cannot change your beneficiary. (Remember: Notify NYSTRS if you selected a pop-up option and your beneficiary predeceases you so we can adjust your monthly benefit to the Maximum.)

Tiers 2–6 Death Benefit

Tier 2-6 members who meet the eligibility requirements are covered by a survivor's benefit. This payment would be made in addition to what is provided by the option you selected, even if it is the Maximum benefit. You may change your beneficiary at any time. The amount of the survivor's benefit in retirement is as follows:

1st Year: 50% of benefit at retirement
2nd Year: 25% of benefit at retirement
3rd & Ensuing Years: 10% of benefit at age 60 or at retirement if earlier

Death benefit payments are made in a lump sum unless you specified a monthly annuity. The beneficiary of a lump sum payment may elect, within 90 days of a retiree's death, to instead receive a monthly annuity.

Automatic Cost-of-Living Adjustment (COLA)

Your retirement benefit is subject to automatic, annual cost-of-living adjustments when you meet the eligibility requirements.

To be eligible, you must meet one of the following criteria:

  • At least age 62 and retired at least five years; or,

  • At least age 55 and retired at least 10 years; or,

  • Receiving a disability benefit and retired for at least five years (regardless of age).

A surviving spouse receiving a lifetime survivor's benefit will receive one-half the benefit increase the retiree would have received.

The COLA is 50% of the increase in the Consumer Price Index (CPI) recorded between the current and previous year's March. It can be a minimum of 1% to a maximum of 3%. The percentage is multiplied by the first $18,000 of your retirement benefit.

Tax Considerations

Your NYSTRS benefit is subject to federal income tax, but is exempt from New York State income tax. If you are considering a move to another state, we suggest you contact that state's tax department to understand how your benefit will be taxed. You can also find information about other states' tax laws at www.rpea.org.

If you have previously taxed member contributions remaining in the System, a small percentage of your benefit may be non-taxable. We will report any such non-taxable amount to you. (Please Note: Contributions made by Tier 3 and 4 members before July 1, 1989, are included in the non-taxable amount.)

Year-End Reporting

You will receive a 1099-R form from the System each January. It will list the gross amount of your benefit, the taxable amount and any federal tax withheld for the previous calendar year.

We send Copy A of the form to the Internal Revenue Service. You file Copy B with your federal tax return and keep Copy C for your records.

Two items regarding your 1099-R to keep in mind:

  1. Some new retirees mistakenly believe that the income listed is inaccurate. They reach this conclusion because the first few benefit payments new retirees receive represent an estimate of what the actual amount will be. When your retirement is finalized, you will receive a lump-sum adjustment — which may or may not be paid in the same tax year as your first benefit payments. Since you are taxed only on the income paid in any given tax year, the gross amount on your 1099-R may be different than what you expected.

  2. COLA adjustments, by law, are made to eligible retirees each September. As a result, the 1099-R income amount reflects eight months at one monthly payment, and four months at a higher (COLA-adjusted) monthly payment.

Tax Withholding

The federal tax tables can help you determine how much NYSTRS would withhold from your benefit payment under various scenarios.

You can have your taxes withheld from your monthly payments or you can make quarterly estimated tax payments. If you do not file a W-4P Withholding Election and Certificate form, federal taxes will be withheld automatically at the rate for “married with three exemptions.” To elect a new withholding amount, you must submit a W-4P form with the System. You can change your tax withholding at any time and, generally, a change received by the 12th of a month will be reflected in that month's payment. MyNYSTRS account holders have the convenience of updating their W-4P withholding election online.

Make your withholding decision carefully, since you may incur penalties under the estimated tax rules if your tax payments are not sufficient to meet your federal tax obligation. System staff cannot offer tax advice. We recommend you consult a tax advisor or the IRS directly if you need assistance.

W-4P Withholding Election and Certificate

Completing a W-4P

Personal Information

STEP 1: Fill out the top section with your name, complete mailing address, retirement and Social Security numbers, and telephone number. If the address listed on this form is a change of your home address, check the appropriate box.


STEP 2: Complete ONLY ONE of the three sections. If more than one section is completed, the W-4P will not be processed and will be returned to you for further action.

Section 1
Complete if you DO NOT want
federal income tax withheld.

Section 1

If you decide not to have taxes withheld, you may be required to file estimated taxes.

Section 2
Complete if you DO want federal income tax withheld.

Section 2

     If you decide to have taxes withheld, your withholding will be determined by Internal Revenue Service withholding tables. Whenever the IRS adjusts its tables, your monthly withholding amount will automatically change. Generally, the IRS changes the tables in January.

Section 3
Complete to request that a specific amount be withheld monthly.

Section 3

     You specify an exact dollar amount which you want withheld from your monthly benefit. This amount will remain in effect until you change it. You may incur penalties under the estimated tax rules if your withholding and/or estimated tax payments are insufficient.

SIGNATURE______________  DATE ______ STEP 3: Don't forget to sign and date your W-4P form. It's not valid without your signature.

Health Insurance Coverage

Until you become eligible for Medicare, which in most cases is age 65, your health insurance coverage will depend on the choices your former employer offers you. By now, you should have made the necessary arrangements to continue your coverage. The cost and extent of coverage will vary among employers throughout the state. Although there is no guarantee that retirees in the state have the same coverage as active employees, the Legislature prohibits school districts and BOCES from unilaterally diminishing retiree health insurance coverage unless a similar reduction is negotiated for active employees. Please note that health insurance is not available through this System.

New York State Health Insurance Plan
Employers who participate in the statewide health plan must continue health coverage for most retired employees (those employed prior to April 1, 1977), but not necessarily at the same level as prior to retirement. Coverage by the statewide health plan requires a minimum amount of service with the employer, usually five years. The employer may reduce its share to 50% of the premium payments for the retired employee and 35% for additional family members.

NYSTRS will make premium deductions from your monthly pension payment as determined by your employer. However, questions pertaining to eligibility, premium increases or claims should be directed to your former employer or the state agency administering the plan:

New York State Department of Civil Service
Employee Benefits Division
Alfred E. Smith State Office Building
Albany, New York 12239
(800) 833-4344
or (518) 457-5754 for Albany-area calls

Paying for Union Programs

If you so request, we will withhold payments from your retirement benefit for various union programs offered through the New York State United Teachers (NYSUT). Questions about the programs and benefits should be directed to:

New York State United Teachers
800 Troy-Schenectady Road
Latham, New York 12110-2455
(800) 342-9810
or (518) 213-6000 for Albany-area calls

Retired Member Trustee Election

As a retiree, you may cast a vote for the retired member of the NYSTRS Board of Trustees that oversees the administration and operation of the System. The retired member and alternate, who would complete the term if the elected retiree is unable to, serve three-year terms. When only one candidate and alternate are nominated, they are deemed elected, and no formal vote is required.

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