Do You Pay Kansas Taxes on KPERS Retirement Checks?

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KPERS is the acronym for the Kansas Public Employees Retirement System, which provides defined-benefit plans for Kansas public employees, police, firefighters and judges. It has 260,000 members -- active, inactive and retired -- and has $1 billion in assets. Benefits, taxation and funding requirements are controlled by the Kansas state legislature. Local public employers and employees are required to contribute at a rate set by the legislature. As of January 2011, KPERS is only 64 percent funded.

Taxes

Kansas does not charge income tax on state pensions, so your KPERS pension is exempt from state income tax. However, though exempt from Kansas state taxes, if you leave Kansas and establish residency in another state, your pension may be subject to that state's taxes, depending on state law. Your pension also is not exempt from federal taxes, and they are not withheld from your pension check. Each year you will receive a 1099-R form to use for your federal taxes. You must pay them when you file your taxes.

Retiring With Full Benefits

There are three ways you can retire with full benefits from KPERS. If you have one year of service and are 65 years old, you get full benefits. If you have at least 10 years of service and you are 62 years old, you are also entitled to full benefits. The third way to retire with full benefits, at a younger age, is through the point system.

85 Points

The point system allows you to retire with full benefits even if you have not reached retirement age. Beginning with your first year in the KPERS system, you receive a point for each year of service. When the points from your years of service, added to your age, equal 85, you can retire. For example, if you started your public service job when you were 25 and you worked for 30 years, at age 55 your years of service plus your age would equal 85, and you would be eligible for retirement with full benefits.

Early Retirement

You can also retire early from the KPERS system with 10 years of service, but you will do so with a reduced benefit. The benefit reduction is graduated based on your age only. If you are 55 when you decide to retire, but have not yet attained 85 points, your pension will be reduced 41 percent, so if your monthly benefit was $1,000 your reduced benefit would be $590. From age 55 to 60 your pension is reduced by 0.6 percent for each month you are between ages 55 and 60. From 60 to 62 your pension is reduced by 0.2 percent for each month you are between ages 60 and 62 so if you retired at age 61, your $1,000 pension benefit would be reduced to $980.

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