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PBGC Blog: Retirement Matters

By now, you have probably received your Form 1099-R from us.

As you arrange to have your income taxes prepared and filed, we would like to share some important information about PBGC benefits and taxes.

While PBGC is required to withhold federal income tax, we do not withhold for state taxes. If your state has an income tax, you may owe tax on your PBGC benefit. To find out more, contact your state tax office (Excel file, 14.4 KB).

Also, if you receive a benefit from PBGC, we report the amount annually to the IRS.

For income tax purposes, each January PBGC sends you an IRS Form 1099-R that states the amount we paid you the previous year.

If you need a Form 1099-R for 2013 and haven't received it, PBGC will get you one.

The IRS has a tool, "Is My Pension or Annuity Payment Taxable?" that will help you determine if your pension or annuity payment from an employer-sponsored retirement plan is taxable.

States with the Highest Number of Unclaimed Pensions. New York (6,678/$40.33 million). Illinois (4,344/$85.36 million). California (2,966/$7.64 million). Texas (2,278/$10.68 million). New Jersey (2,114/$11.70 million). Ohio (1,908/$12.82 million).
The beginning of a new year typically means the onset of new goals and perhaps the continuation of last year's resolutions. For many, saving more money might always be #1 or a close second on that list.

One source of this year's extra savings could be money from an unclaimed pension.

Across the country, there are more than 31,000 people who haven't claimed pension benefits they are owed. Those unclaimed pensions are now north of $280 million, with individual benefits ranging from 12 cents to almost $1 million.

The states with the most missing pension participants and money to be claimed are:

  • New York (6,678/$40.33 million)
  • Illinois (4,344/$85.36 million)
  • California (2,966/$7.64 million)
  • Texas (2,278/$10.68 million)
  • New Jersey (2,114/$11.70 million)
  • Ohio (1,908/$12.82 million)

More...

PBGC works to ensure that people who get benefits from us receive them on time — by the first of the month. However, there's one time when that doesn't happen — the beginning of the year.

Typically, if the first of the month falls on a weekend or holiday, direct deposits will usually post before the first of the month. For this reason, June, September, and December 2013 direct deposits arrived before the first of the month. For tax purposes, January is the exception to this rule.

If payments arrived in December, it would result in a tax liability for 2013 instead of 2014. For this reason, your funds will be deposited on Jan. 2, 2014, one day after the New Year.

If you get a paper check (mailed on Dec. 27, 2013), and have not received it by January 7, please call us at 1-800-400-7242 or visit our Contact Us page for other options.

Want to receive future payments more quickly? Remember, PBGC offers direct deposit. It's the most secure and fastest way to receive your payment, and your funds are always available on payday — even if the weather's bad, the post office is closed, or you're out of town. The future electronic direct deposit dates are already mapped out.

To learn more or sign up for direct deposit, please visit MyPBA or call 1-800-400-7242.

On June 26, 2013, the Supreme Court ruled that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional.

Section 3 of the Defense of Marriage Act of 1966 defined "marriage" as a "legal union of one man and one woman as husband and wife" and a "spouse as "a person of the opposite sex who is a husband or a wife."

As a result, PBGC changed its policy to recognize same-sex marriages in our administration of benefits in terminated plans under the same rules applicable to opposite-sex marriages.

For a more detailed explanation of how PBGC recognizes marriage, please visit the "Benefits" section of our Workers & Retirees page. 

The legislation that authorizes the Health Coverage Tax Credit (HCTC) expires January 1, 2014, and the tax credit will no longer be available.

Some key dates in this program's expiration were/are:

October 1: the HCTC Program will no longer accept new registration forms for individuals or qualified family members who wish to be enrolled into the monthly HCTC program

December 24: The final monthly HCTC payment due date

January 1: HCTC expires

PBGC has a HCTC webpage that details some additional information. The Internal Revenue Service (IRS) also has a webpage dedicated to periodic updates with important information affecting the HCTC program

Maximum Yearly Guarantee. 2012 $56,000. 2013 $57,500. 2014 $59,320.Beginning in 2014, the maximum yearly guarantee for a 65-year-old retiree will be almost $59,320 – a 3.2% increase from the $57,500 rate in 2013.

Most retirees who get their pension from PBGC – almost 85 percent according to a 2006 study  – receive the full amount of their promised benefit. In some cases, retirees can receive more than the PBGC maximum guarantee.

The PBGC maximum guarantee is based on a formula prescribed by federal law. Yearly amounts are higher for people older than age 65 and lower for those who retire earlier or choose survivor benefits.

If a pension plan ends in 2014, but a retiree does not begin collecting benefits until a future year, the 2014 rates still apply. For plans that terminate as a result of bankruptcy, the maximum yearly rates are guided by the limits in effect on the day the bankruptcy started, not the day the plan ended.

The increase is not retroactive and applies only to single-employer pension plans. The maximum guarantee limit for participants in multiemployer plans is $12,870 with 30 years of service, which has been in place since 2001.

For more information, see PBGC's Maximum Monthly Guarantee Tables or a previous blog post "Making Sense of the Maximum Insurance Benefit."