Title. Retiree Resource. Missouri LAGERS. A secure retirement for all L A G E R S

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1 Retiree Resource Title MISSOURI L A G E R S Missouri LAGERS A secure retirement for all Pictured from left: Gerry Stegeman, Michael Henderson City of Jefferson, Public Transit Department

2 Contact Us Table of Contents 701 West Main St., PO Box 1665 Jefferson City, MO (Local) Fax: Your Tax Information Annual Meeting Update Taxes & Your LAGERS Benefit 2018 Retiree Link Meetings More Information Coming Soon! Follow Us! 5. Changing Your Tax Withholdings 6. How Retirement Benefits for Government Workers Help Everyone.

3 Your Tax Information Will be mailed by the end of January As in years past, LAGERS staff will be diligently working to get your tax document (1099-R) to you in the most efficient manner possible. The federal guidelines governing 1099-R distribution require that LAGERS sends your tax documentation by the last day of January. For the past few years, you have received your 1099-R documentation a few days earlier. However, keep in mind our due date is the last day in January. So, you may not receive your 1099-R until early February. If you would like to view and print your 1099-R a few days before you receive it in the mail, log-on to your mylagers account! If you have not received your 1099-R by the second week of February, please call the LAGERS office. Annual Meeting Update Celebrating 50 Years of Retirement Security In October, employer and member representatives from many of LAGERS member employers converged to attend the LAGERS 50 th Annual Meeting. At the 50 th Annual Meeting, attendees heard updates about their system s strong financial status, learned more about their system through educational sessions, and participated in the election of the system s Board of Trustees. At this year s Annual Meeting, there were two Board of Trustees vacancies. The Member Delegates re-elected Arby Todd as a Member Trustee for a four-year term ending December 31, The Employer Delegates reelected J. Robert Ashcroft as an Employer Trustee for a four-year term ending December 31, 2021.

4 Taxes and Your Retirement Benefit As we flip our calendars to 2018, we re all thinking about what lies ahead, New Year s resolutions, winter weather and maybe, taxes. For one reason or another, we sometimes forget about taxes until April. You may be thinking, I m retired. My taxes won t be a big deal, so I won t worry about it until April. Don t count on your taxes being lower without some tax planning with a qualified tax professional or CPA. Below are topics that will help you understand the taxation of your LAGERS benefit and how it may affect your taxable income. Is my benefit subject to federal income tax? Yes. However, if you were required to contribute 4% of your compensation while employed and you did not receive a refund of your contributions, those contributions have already been taxed. Once the you begin receiving a monthly benefit, a portion of the benefit will not be taxable. Is my benefit subject to Missouri income tax? Depending on your adjusted gross income, your public pension benefits may be up to 100% exempt from Missouri state income tax. Married couples with an adjusted gross income of less than $100,000 and single individuals with an adjusted gross income of less than $85,000, will qualify for their public pension income to be 100% tax exempt, limited to the maximum Social Security payment amount for each spouse. If your adjusted gross income exceeds the eligibility limit, you may qualify for a partial exemption. To learn more visit the Missouri Department of Revenue s website or contact a qualified tax professional. Will LAGERS withhold taxes from my monthly benefit?. If you choose, LAGERS will withhold federal and /or state of Missouri income taxes. LAGERS cannot withhold state income taxes for states other than Missouri. So, if you move outside of Missouri, LAGERS will not be able to withhold state income taxes for your state of residence. You can have LAGERS withhold a specified dollar amount, apply the tax tables based on the income you are receiving from LAGERS, or apply the tax tables with an additional dollar amount withheld. You can change your tax withholding at any time throughout retirement. Also, if you move out of state, notify LAGERS to stop withholding state of Missouri income taxes (if applicable). Will LAGERS produce tax documentation I can use to file my taxes? As stated in the article on the previous page, LAGERS is required to mail your 1099-R by January 31 st. The R will show the taxable income that you received from LAGERS, the amount of taxes withheld from your benefit, and more. You also can access these documents on the mylagers portal.

5 What if I took a Partial Lump Sum? If you received a Partial Lump Sum within the last year, taxation will depend on how you received the distribution. If you elected to receive the benefit directly, the Partial Lump Sum is taxable. However, if you had an employee contribution balance with LAGERS at the time of retirement, a portion of your partial lump sum may be nontaxable because of those contributions. When taking the distribution directly, the IRS code instructs that LAGERS withhold 20% for federal income tax purposes. The 20% withholding will not include any state income and due to your income level, your tax liability may be more or less when you file your taxes. Depending on the circumstances of your retirement or age when you receive the Partial Lump Sum, early distribution penalties may apply. If so, those penalties will be assessed when you complete your taxes. Keep in mind, you will receive a separate 1099-R for your Partial Lump Sum Distribution. What about a direct rollover? If you chose to transfer (rollover) your Partial Lump Sum directly into another qualified retirement account at retirement, the funds transferred take the characteristics of the account where the money was deposited. As well, the distributions will be taxed when you withdraw it from the qualified retirement account, not when the transfer occurred. As you can tell, there is a substantial amount of information to remember about the taxation of your LAGERS benefit! On top of that, this article does not include any of the other variety of taxable events that can occur with your other retirement income. So, as stated in the beginning, a little planning and discussion with a qualified tax professional about your taxation in retirement can go a long way. Please note:lagers staff cannot give tax advice. Read this blog post and many others at blog.molagers.org 2018 Retiree Link Meetings The 2018 Retiree Link schedule is below. Just like last year, we will send you a postcard mailer with further details for the meeting in your region! April 12, 2018 Hannibal, MO April 19, 2018 Jefferson City, MO May 24, 2018 St. Louis, MO Area August 15, 2018 St. Joseph, MO August 23, 2018 Cape Girardeau, MO September 13, 2018 Springfield, MO July 19, 2018 Independence, MO

6 Need to Change Your Tax Withholdings? LAGERS by the Numbers Retirements in ,600 Annual Dollars Paid to Retirees Last Year $283 Million LAGERS Pre-Funding Percentage 94.8 % Many of you may be choosing to have LAGERS withhold taxes from your monthly benefit. However, you have the flexibility to change these withholdings as your tax situation changes throughout retirement. To change your tax withholdings, you can complete a new tax withholding form from the LAGERS website and send it back to the LAGERS office. Or, you could change your tax withholdings online through your mylagers account. To change your withholdings through your mylagers account, you will need follow the instructions below: 1. Log-in. 2. Select My Accounts from the menu on the left. 3. Select the your retirement date link on the screen. 4. Select Update Withholding. 5. The next screen will show your current withholdings and a blank portion for you to enter your new withholding elections. 6. Update withholding in the blank portion and click Calculate New Benefit. 7. Your mylagers account will show you the potential impact your changes will have on your benefit. 8. To complete the changing of your withholdings, check the box above the Apply Changes button and click the Apply Changes button. 9. A notification will pop-up confirming you have successfully changed your withholding. Access Your Account 24/7 Through mylagers Use mylagers to keep your personal and address information up to date, update your tax withholdings, print your 1099-R tax document and more.

7 How Retirement Benefits for Government Workers Help Everyone! Employee benefits are often thought to be for the betterment the employees; however, upon a deeper look at LAGERS benefits, one can see employee benefits provide value not just to the employee, but to all stake holders. Just like a publicly-held company which must make decisions affecting the bottom line so the shareholders may profit, government leaders who serve the taxpayers have the responsibility to enhance prosperity of their communities. Therefore, decisions about employee benefits must make sense for the shareholder or taxpayer as well as the employee. Northwest 1,431 Retirees $15,024,576 West 4,047 Retirees $62,262,144 Northeast 1,095 Retirees $10,274,867 Central 2,821 Retirees $34,688,385 East 3,255 Retirees $48,605,330 As you know, LAGERS provides defined benefit pension plans to political subdivisions within the state of Missouri. Retirees are paid a modest pre-determined amount each month. The amount of the benefit is based on a formula driven by the employee s years of service and salary. About 75% of state and local government workers in the U.S. are covered by these types of plans. Government entities continue with defined benefit plans because they help them attract workers to provide valuable services to the taxpayers. Since the amount of the benefit is tied to longevity, defined benefit plans discourage turnover. But, most importantly, defined benefit plans help employees retire when they should. This is good for the employer so they can avoid the additional costs incurred when employees stay on the job too long. All of these advantages of a defined benefit retirement plan are also good for the taxpayers. Taxpayers want well maintained streets, good parks, healthy businesses, and great public safety. These things are a product of welltrained, experienced, and motivated public workers. Southwest 4,510 Retirees $66,049,968 Southeast 2,664 Retirees $26,623,514 Furthermore, over 90% of LAGERS retirees, like you, remain living in the same community after retirement. Your consistent monthly retirement benefits are then re-invested in local goods and services, allowing your communities to reap the benefits of your monthly LAGERS retirement benefits as well. In fact, last year, LAGERS retirees living in Missouri received $263 million in monthly retirement benefits. This is a substantial economic stabilizer for your local communities because you use the income to purchase goods and services in your community. Employee benefits must provide value not only to the employee, but to all stakeholders. Defined benefit pensions help attract good workers, incentivize those workers to stay with their employer during their most productive years, then allow them to retire when they should. During retirement, the steady monthly payments are reinvested in the community to purchase goods and services. For all of these reasons, defined benefit pension plans are a good value for the taxpayers.

8 Missouri Local Government Employees Retirement System 701 West Main St., PO Box 1665, Jefferson City, MO Tax Documents Retiree Resource will be mailed by the last day of January Is your address up to date? Make sure your address is updated by logging in to your mylagers account. Lose a loved one? Make sure you contact LAGERS if your beneficiary passes away. You may be eligible for the Pop-Up Provision.