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How Are My Retirement Earnings Taxed?

I retired from the Federal Government on 1/03/2013 and I need to know how my federal tax is calculated.

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.

About the Author

John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.