Taxes & 1099-R
Federal and Michigan State Taxes on Your Pension
Your WCERS retirement benefit may be subject to federal and Michigan state income taxes, depending on your individual situation.
Michigan State Taxes and Public Act 4 of 2023
Under Michigan Public Act 4 of 2023, certain retirement and pension income may be exempt from Michigan state income tax based on age and other eligibility requirements.
Because every retiree’s situation is different, WCERS does not determine eligibility for tax exemptions and does not provide tax advice.
We strongly encourage you to speak with a qualified tax preparer or financial advisor to determine the best withholding option for you.
Federal and State Withholding Changes
Taxes are withheld from your monthly benefit only according to the withholding forms you submit.
WCERS does not automatically adjust your tax withholding due to changes in tax laws or personal circumstances.
To make changes, you must submit updated federal and/or Michigan tax withholding forms to WCERS.
Important Tax Disclaimer
The Wayne County Employees’ Retirement System (WCERS) does not provide tax, legal, or financial advice.
For assistance with tax planning or withholding decisions, please consult a professional tax advisor.
Understanding Your 1099-R Tax Form
Each year, WCERS mails your 1099-R form by the end of January.
This form reports:
You will use this form when filing your income tax return.
Common 1099-R Boxes Explained (With Examples)
Below are some of the most important boxes retirees commonly review:
Box 1 – Gross Distribution
This shows the total amount of pension payments you received during the year.
Example:
If you received $2,000 per month, Box 1 may show:
$24,000
Box 2a – Taxable Amount
This shows the portion of your pension that is taxable for federal income tax purposes.
Example:
Box 1: $24,000
Box 2a: $22,000
This means $22,000 of your pension is considered taxable income.
(Some retirees may see the same amount in Box 1 and Box 2a.)
Box 4 – Federal Income Tax Withheld
This shows how much federal tax was withheld from your pension payments during the year.
Example:
$2,400
This means WCERS sent $2,400 in federal tax payments on your behalf.
Box 12 – State Tax Withheld (Michigan)
This shows the total Michigan state income tax withheld (if applicable).
Example:
$800
This means $800 was withheld for Michigan state taxes during the year.
Box 14 – State Distribution (Michigan)
This shows the portion of your pension reported to the State of Michigan.
Often this amount matches your gross distribution.
Important Note About 1099-R Amounts
The amounts shown on your 1099-R reflect payments made during the calendar year (January through December), not your monthly benefit amount.
If you have questions about how the amounts were calculated, WCERS can help explain the payment totals but cannot provide tax advice.
Need a Replacement 1099-R?
If you did not receive your 1099-R by the end of January or need a replacement copy, please contact the WCERS office for assistance.