Worksheet For Recipients Of Pera/dps Pension Benefits (Page 2 of 4) in pdf

income tax. From July 1, 1984 through Dec. 31, 1986, employee contributions to PERA

were tax-deferred for federal income tax purposes but not for Colorado income tax

purposes. From Jan. 1, 1986 through Dec. 31, 1986, employee contributions to the DPS

pension plan were treated in the same manner. Employee contributions to both plans

after Dec. 31, 1986, are tax-deferred for both state and federal income tax purposes.

Employee Contributions

To PERA

To DPS Pension Plan

Federal Income

Colorado Income Federal Income

Colorado Income

Tax Purposes

Prior to July 1, 1984

taxable

July 1, 1984 or after,

tax-deferred

taxable

but before Jan. 1, 1986

Jan. 1, 1986 or after,

tax-deferred

taxable

tax-deferred

taxable

but before Dec. 31, 1986

After Dec. 31, 1986

tax-deferred

2) If I am eligible for both the PERA/DPS modification and the pension subtrac-

tion, which one should I claim?

In most cases, you should claim the first $20,000/$24,000 of your pension subtraction first,

then claim the remainder of the pension (if any) as a PERA or DPS modification. You are

allowed to carry the remaining PERA or DPS modification amount forward to the next tax

year.

EXAMPLES

a) Mr. State Employee retired on July 1, 2005 at age 57. He is entitled to a PERA subtrac-

tion of $8,400 for contributions he made to his PERA retirement plan during 1984, 1985

and 1986. For 2005, his PERA retirement benefits included in his federal taxable income

are $16,000. For 2006, his PERA retirement benefits included in his federal taxable

income will be $32,000. It would be advantageous for Mr. State Employee to claim a

$16,000 pension subtraction for 2005. For 2006, he should claim the $20,000 pension

subtraction and his one-time $8,400 PERA exclusion.

b) Ms. Denver Teacher retired on Jan. 1, 2004 at age 55. She is entitled to a DPS

subtraction of $2,800 for contributions she made to her Denver Public Schools

retirement plan during 1986. Her 2004 federal taxable income is $21,000 (after

exemptions and deductions). Her 2005 and 2006 federal taxable income (all from her DPS

pension) is also $21,000 each year. For 2004, it would be advantageous for her to claim

her $20,000 pension subtraction and $1,000 of her Denver Public Schools retirement

contributions made during 1986 as a DPS subtraction. For 2005, she would claim the

$20,000 pension subtraction and her $1,000 DPS retirement subtraction (left over from

2004) on her 2005 Colorado Form 104. For 2006, she would claim the $20,000 pension

subtraction and the remaining $800 of her DPS retirement subtraction.

3) I left state service but I am not retiring. I withdrew my PERA contributions after

I left my employment. How do I determine my PERA subtraction?

If you terminated your state or Denver Public Schools employment and you collected your

retirement contributions when you terminated, you must determine how much of your

PAGE 2 OF 4

INCOME 16 (10/06)

contributions were previously taxed by Colorado.

Worksheet For Recipients Of Pera/dps Pension Benefits Page 2

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