How Are My Retirement Earnings Taxed?

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By on May 11, 2014 in Q&A with 3 Comments

Q: I retired from the Federal Government on 1/03/2013 and I need to know how my federal tax is calculated. I was told that my retirement is not taxable up to the amount that was contributed. Is this correct? When I retired, I was not advised.

A: Correct.  However, you receive your already taxed contributions back bit-by-bit based on your life expectancy.  This means that the bulk of your retirement will be taxed.  Because you are CSRS, expect around 85% of your retirement to be taxable and 15% to be tax free.  OPM will send you a 1099 in January that will tell you how much you need to report on your federal income tax.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2017 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.


About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.