VCERA will withhold federal and state (California only) income taxes from your monthly retirement benefit according to the preferences you indicated on the Federal/State Income Tax Withholding Form. You may a) elect a specific percentage, b) use the standard tax tables, or c) designate a fixed amount of federal and state tax withholdings. You can update your preferences at any time in writing. A qualified tax advisor can assist you in determining the appropriate withholding amounts.
At the end of each January, VCERA will mail you a Form 1099-R showing the total retirement benefits paid to you in the preceding calendar year. The taxable portion of the distributions will be calculated using the Internal Revenue Service’s Special Rule. Under this Rule, you have a certain period of time (based on your age or the combined ages of you and your spouse) to recover after-tax contributions.
A Form 1099-R also will be issued for any refunds of taxable retirement contributions. Please keep your mailing address current with VCERA so that you receive important tax documents and other account information.
Please direct all questions regarding the taxability of your VCERA benefit to a qualified tax advisor.