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					Commonwealth of Pennsylvania
State Employees’ Retirement System




   2007 Guide To Your SERS-Issued 1099-R Tax Form



                                                                                                                                      ®


   Each year SERS calculates your total benefit received from           tax return in the amount you report as tax withheld. If the
   the fund "gross distribution" and provides this and other           amount listed in Box 4 is more than zero, you are required
   information to you on Form 1099-R. We also report this              to attach Copy B of each Form 1099-R you receive from
   information to the Internal Revenue Service (IRS).                  SERS to your federal return.

   If you withdrew all or a portion of your Accumulated                State and local taxes, Pennsylvania residents
   Deductions or received a pension benefit from SERS                   Copy 2 of Form 1099-R is intended for filing with state
   in 2007, you will receive at least one Form 1099-R.                 and/or local income tax returns. However, under the
   Depending on the retirement option selected and possible            Pennsylvania State Employees’ Retirement Code, SERS
   rollover of your account to an IRA or other qualified plan,          benefits are totally exempt from Pennsylvania state and
   you may receive several different Form 1099-Rs. You                 local income taxes. SERS does not furnish copies of Form
   must report all the distributions on your federal income            1099-R to any state or local tax agency.
   tax return, and if you do not live in Pennsylvania, you
   may be required to file copies with your state and local             State and local taxes for residents
   income tax returns, as well.                                        living in other states or abroad
                                                                       If you live in another state, you may be subject to state
                                                                       and/or local income tax and may be required to file Copy 2
   Taxes On SERS Retirement Payments                                   of Form 1099-R. There may be exemptions, deductions, or
   Federal taxes                                                       credits for certain Annuitants. Certain state and local tax
   Generally, all payments from SERS are subject to federal            laws may exempt some or all retirement benefits. Contact
   income tax, except those considered by the IRS to be                your state and local revenue offices or a qualified tax
   a return of contributions made by the member prior                  consultant for information.
   to January 1, 1982, or contributions made to purchase
   Creditable Service after the service was rendered.                  If you permanently live outside the U.S., you should
   The Federal income tax withheld amount listed in Box 4              familiarize yourself with any income tax obligations you
   of Form 1099-R must be included on your federal income              may have to non-U.S. taxing authorities.
                                                                                                                (continued on pg.3)


           This guide is provided to you as a recipient of benefits from SERS in 2007, either as a member, Alternate Payee,
           or Beneficiary. It provides general information on the taxation of retirement benefits. Refer to it for filing the
           enclosed copy of Internal Revenue Service (IRS) Form 1099-R with your federal income tax returns and, when
           required, with your state and local income tax returns.

           For general information about your rights and benefits in SERS, you or your professional tax advisor may contact
           your SERS Regional Retirement Counseling Center at 1-800-633-5461.

           For advice on taxes or estate planning, SERS urges you to contact the IRS or a professional financial or tax advisor.



        SERS Disbursements Section • 30 North Third Street, Suite 150 • Harrisburg, PA 17101-1716 • 1-800-633-5461
    How To Read Your 1099-R





                                            * Figures are for informational purposes only.
    Box 1 - Gross distribution: lists the total amount of benefits    You must include this amount on your income tax return
    paid to you before taxes are calculated and deducted.            as tax withheld, and if Box 4 shows an amount (other than
    Report the amount on Form 1040 or 1040A on the line for          zero), attach Copy B to your return.
    “IRA distributions” or “Pensions and annuities” (or the
    line for “Taxable amount”), whichever applies. However,          Box 5 - Employee contributions: lists the Annuitant’s
    if this is a lump-sum distribution, report it on Form 4972,      investment in the contract (after-tax contributions), if any,
    Tax on Lump-Sum Distributions or Form 5329 Additional            recovered tax free this tax year.
    Taxes on Qualified Plans, whichever applies.
                                                                     Box 7 - Dist. code: lists, by code, the type of distribution
    Box 2a - Taxable amount: lists the taxable amount of the         SERS made to you during the year. Distribution Codes
    total amount of benefits paid to you. Depending on your           are detailed on the back of Form 1099-R, Copy C.
    situation, a portion of the benefit paid to you may not
    be taxable and the amount in Box 2a will differ from             Box 9a - Your Total Dist.: If a total distribution was made to
    the amount in Box 1. The difference between your gross           more than one person, your percentage of the distribution
    pension listed in Box 1 and the taxable portion listed in        is shown here.
    Box 2a will be shown in Box 5 - Employee Contributions.
                                                                     Box 9b - Total employee contributions: is filled in only if
    Box 2b - Taxable amount not determined: a check mark             2007 was your first year as a SERS Annuitant. It lists Total
    in this box indicates that SERS does not have enough             employee contributions made to SERS that are excludable
    information to determine the portion of your benefit that         from federal income tax.
    is taxable, and Box 2a should be blank. Contact the IRS or
    a professional tax advisor for assistance in determining
    this amount.                                                     For general information about your rights and benefits in SERS,
                                                                       you or your professional tax advisor may contact your SERS
    Box 2b - Total distribution: a check mark in this box              Regional Retirement Counseling Center at 1-800-633-5461
    indicates that the distribution was a total distribution that                SERS Web site: www.sers.state.pa.us
    closed out the account.
                                                                       For referenced federal tax forms and assistance with those
    Box 4 - Federal Income Tax Withheld: lists the federal              forms, contact the IRS at: www.irs.gov - 1-800-829-1040
    income tax withheld from the gross distribution.


2 - 2007 Guide To Your SERS-Issued 1099-R Tax Form
(from pg.1)

Federal Taxable Income Calculation                              a lump-sum death benefit will receive a Form 1099-R with
There are several IRS-approved methods of calculating           the Box 2b Total Distribution block checked.
the taxable and non-taxable portions of SERS benefits.           The lump-sum death benefit payment to a Beneficiary is
The method used depends upon when your SERS annuity             fully exempt from Pennsylvania state or local taxes.
began and certain other factors.
                                                                Disability Annuities
In most cases, SERS uses the Simplified Method (or so-called    If you retired on disability, you generally must include in
“Safe Harbor Exclusion”) for calculating the taxable and        income any disability annuity you receive under a plan
non-taxable portions of SERS annuity payments that began        that is paid for by your employer. You must report your
after November 18, 1996.                                        taxable disability payments as wages on line 7 of IRS Form
                                                                1040 or Form 1040A until you reach minimum retirement
Under this method, previously taxed contributions               age. See IRS Publication 575, Pension and Annuity Income,
made after December 31, 1986, can no longer be claimed          for further information.
as totally previously taxed in the year in which they
are received. Instead, they are excluded from federal
income tax over a period equal to the expected number of        Federal Tax Credits
payments, based on the member’s age at retirement.              SERS Annuitants or Survivor Annuitants who receive Form
                                                                1099-R may be eligible for either an earned income credit
See IRS Publication 575, Pension and Annuity Income, or         or a separate credit for the elderly or disabled. For more
Publication 939, General Rule for Pensions and Annuities        information about these credits, refer to the instructions for
for further information, specific to your date of retirement,    completing IRS Form 1040 or contact your local IRS office.
on calculating the federal tax on your SERS annuity.
                                                                Distributions After Death, Federal Tax Implications
Total Distributions                                             Contact the IRS or your professional tax advisor and see
If you terminated service and received your total               IRS Publication 575, Pension and Annuity Income.
Accumulated Deductions during 2007, you will receive a
Form 1099-R with the Box 2b Total Distribution                  Pension Protection Act (PPA) of 2006
block checked.                                                  Retired public safety employees are encouraged to talk 

                                                                with their tax advisor about a possible reduction in their 

If you elected to take the distribution in installments, SERS   income tax bill resulting from PPA Section 828, relating to 

will provide a Form 1099-R for reporting on each year an        early distribtuions of a retirement benefit, and PPA Section 

installment is received from SERS. The year in which your       845, relating to retirement benefit distributions withheld for 

final installment is received, your Form 1099-R will have        health insurance. 

the Box 2b Total Distribution block checked.
                                                                Please be aware that SERS Retirement Counselors can 

The Beneficiaries of a deceased SERS member who in 2007          NOT determine your eligibility for a specific tax reduction. 

received the member’s total Accumulated Deductions as           Contact your tax advisor regarding your eligibility. 




Frequently Asked Questions Regarding Your SERS-Issued 1099-R

Does SERS provide tax advice?                                   each distribution code. Box 7 identifies the type of benefit
No. You should seek advice from a professional tax              you received from SERS for that particular 1099-R. For
advisor or the IRS at 1-800-829-1040 or www.irs.gov. The        example, you may have received multiple 1099-Rs if you:
information contained in this guide is for general guidance
only and does not cover every relevant tax law.                    • Retired in 2007 and received a monthly annuity as
                                                                     well as a lump sum distribution of your monies,
Why did I receive more than one 1099-R?                              or rolled over any portion of the taxable lump sum
The IRS allocates distribution codes in Box 7 to identify            distribution and received the non-taxable portion.
the type of payments you received during the previous
                                                                   • Received your own SERS retirement benefit and a
tax year. A list of these codes may be found on the reverse
                                                                     Survivor or Beneficiary benefit from a former
side of Copy C. If you received more than one type of
                                                                     SERS member.
payment, SERS must print a separate Form 1099-R for
                                                                                                          (continued on pg.4)

                                                                            2007 Guide To Your SERS-Issued 1099-R Tax Form -     3
   Frequently Asked Questions (continued from pg.3)


    When I try to e-file my taxes online, the program will not        same. Until you recover the total of all non-taxable
    accept SERS PAYER’s Federal ID Number of 23-1732438G.             money, a portion of your benefit is paid to you tax-free
    This identification number is correct. However, when               each year.
    entering the number, omit the last character, “G.” Each
    software package can be different, but they all require           Is there a penalty for withdrawing my funds and having the
    numeric input and they all use the same format of 9               pre-tax portion sent to me directly?
    digits (usually 2 digits, a dash, and then the last 7 digits).    Yes. If you receive a payment before you reach age
    Follow the software instructions for your particular              59½ and you did not roll it over, you will have to pay
    package. Contact the IRS or a professional tax advisor            an extra tax equal to 10 percent of the taxable portion of
    for further assistance.                                           the refund as well as the regular income tax. There may
                                                                      be exceptions to the tax. For more information on the
    What is the difference between Distribution Code 1, 2 and 7?      additional 10 percent tax, see IRS Publication 575.
    Distribution Code 1 – Early distribution, no known
    exception. A lump sum payment, not rolled into a                  I believe that my SERS-Issued 1099-R is incorrect. What
    qualified plan, and made before the age of 59½.                    should I do?
                                                                      Please write to SERS, at the address on the front of this
    Distribution Code 2 – Early distribution, exception               guide; be sure to include your daytime telephone number,
    applies. A series of monthly annuity payments that are            a copy of your Form 1099-R and indicate the information
    substantially equal (at least annually) over the life or life     you believe to be incorrect. We will review your Form
    expectancy of the member made before the age of 59½.              1099-R and, if necessary, issue a corrected Form 1099-R to
    Or, a lump sum payment, not rolled into a qualified plan,          you. If we determine that the original form was correct,
    and made between the ages of 55 & 59½.                            we will tell you so.

    Distribution Code 7 – Normal distribution. A normal               How do I change my tax withholding?
    distribution from the plan, made after the age of 59½.            You can authorize SERS to start, stop or change your
                                                                      federal income tax withholding from your benefits by
    What is Box 9b, “Total employee contributions?”                   completing a Withholding Certificate for Pension or
    This amount represents any Accumulated Deductions that            Annuity Payments (W4-P) form. You can access this IRS
    were previously taxed and available to be recovered at the        form through our Web site, www.sers.state.pa.us, or you
    beginning of the tax year. Contributions made to SERS             can call 1-800-633-5461 to request the form. If you have
    prior to January 1, 1982 and service purchase payments            any questions regarding the amount to withhold, contact
    made to the plan prior to January 1, 1987 are eligible for        a qualified tax professional.
    tax-free withdrawal from the plan at retirement. These
    monies are called “Pre-87 Non-taxable Contributions”
                                                                      I receive my pension through direct deposit to my
    and if not withdrawn at retirement are recovered under            financial institution. If I move, do I have to notify SERS
    the “Safe Harbor Recovery Rules” (see IRS Publication             of my new address?
    575). Service purchase payments made after January                Yes. We need to send you important information – such
    1, 1987 are called “Post-86 Non-taxable Contributions”            as this 1099-R, your Personal Statement of Retirement
    and are also recovered using the “Safe Harbor Recovery            Benefits, newsletters and benefit verification forms. If
    Rules.” Once all the tax-free contributions are recovered,        your address changes permanently or temporarily, please
    your gross distribution and taxable amount will be the            let us know in writing as soon as possible.


                                                         Duplicates of Form 1099-R
          You can access your personal SERS account information and print duplicates of your 2007 Form 1099-R form through
          the secure Online Member Services area on the SERS Web site. For security reasons you will need to register on the
          site, if you have not done so already. Visit www.sers.state.pa.us and click on “Account Login.”

          In addition, duplicates of Form 1099-R are available from SERS free of charge for tax years 1995 through 2007.
          Duplicate 1099-R forms for tax years before and including 1994 are available at a cost of $5 each. Duplicate forms
          may be obtained by writing to the SERS Disbursements Section, 30 North Third Street, Suite 150, Harrisburg PA
          17101-1716. Include your name, Social Security number, current address and daytime telephone number. Indicate
          the tax years for which you are requesting a Form 1099-R and enclose a check or money order in the correct
          amount payable to the State Employees’ Retirement Fund.




4 - 2007 Guide To Your SERS-Issued 1099-R Tax Form

				
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