The following information is not intended to be tax advice. OPERS encourages all members to seek advice from a tax advisor on matters of taxation. Benefits from OPERS are considered income for federal and Oklahoma income tax purposes.
Federal and state laws require the Oklahoma Public Employees Retirement System (OPERS) to withhold income tax from your monthly retirement benefit unless you tell us in writing that you do not want taxes withheld. The tax rates applied to your benefit are based on withholding tables provided by the Internal Revenue Service and the Oklahoma Tax Commission.
Oklahoma State Income Tax
Under Oklahoma tax provisions, a portion of retirement benefits paid to an Oklahoma resident may be excluded from an individual taxpayer’s gross income each year. However, you may experience a different tax treatment if you reside in a state other than Oklahoma.
NOTE: If you live outside of Oklahoma and have state taxes withheld on your OPERS benefits, those amounts are remitted to the Oklahoma Tax Commission and not the taxing authority of your state of residence.
Federal Income Tax
If you have any accumulated nontaxable contributions (post-tax contributions) as of your retirement date, you will be able to reduce the taxable portion of your benefit to the extent of your nontaxable contributions in accordance with the Internal Revenue Service’s Safe Harbor provision. Generally, this method allows OPERS to spread your accumulated nontaxable contributions over your life expectancy or the joint life expectancies of you and your joint-annuitant. OPERS will calculate this exclusion for you, and the resulting taxable portion will appear on your Form 1099-R. However, you may consult IRS Publication 575 for more information about the Safe Harbor method.
OPERS will mail you a Form 1099-R at the end of January of each year. This form will show: 1) the gross amount of your retirement benefit for the previous calendar year; 2) the amount of state and federal income tax withheld from your retirement benefit; and, 3) the federal taxable amount of your retirement benefit for the year. The information contained in your Form 1099-R should be used in completing your state and federal income tax return. Click here for 1099-R frequently asked questions.
Federal and State Income Tax Withholding Instructions
You can indicate your tax withholding preferences by completing the Benefit Recipient’s Withholding Preference Certificate. This form and pertinent schedules of the federal and state tax withholding tables are provided below for your convenience.
On the Withholding Preference Certificate you will select one of the three following withholding options:
- You may specify that you do not want federal or state income tax deducted from your benefit.
- You may elect to have specific "allowances claimed" by indicating your marital status and number of allowances. By doing this, OPERS will determine the amount, if any, to be withheld based on current federal and state withholding tables.
- You may elect to withhold a specific dollar amount for federal and state income taxes to be withheld for federal and state income tax for each monthly benefit.
A new Withholding Preference Certificate form may be completed at any time to change future withholdings.
Withholding Preference Certificate
Federal Tax Withholding Tables
State Tax Withholding Tables
Last Revised - February 11, 2015