Publication 721 - Tax Guide To U.s. Civil Service Retirement Benefits - 2002 Page 3
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28Interest is not paid on contributions to the CSRS
To change the amount of tax withholding or to
TIP
for service after 1956 unless your service was for
stop withholding, call OPM’s Retirement Informa-
more than 1 year but not more than 5 years.
tion Office at 1 – 888 – 767 – 6738 (customers
Therefore, many employees who withdraw their contribu-
within the local Washington, D.C. calling area must call
tions under the CSRS do not get interest and do not owe
202 – 606 – 0500), or call Annuitant Express at
any tax on their refund.
1 –800 –409 –6528. No special form is needed. You will
need your retirement claim number (CSA or CSF) and your
social security number when you call. If you have TTY/
Tax Withholding
TDD equipment, call 1–800 – 878 –5707.
and Estimated Tax
You also can change the amount of withholding
The CSRS or FERS annuity you receive is subject to
or stop withholding through the Internet at
federal income tax withholding based on tables prepared
You will need
by the Internal Revenue Service, unless you choose not to
your retirement claim number (CSA or CSF) and your
have tax withheld. OPM will tell you how to make the
Personal Identification Number (PIN). To get a PIN, call the
choice. The choice for no withholding remains in effect until
OPM’s Retirement Information Office. (See the preceding
you change it. These withholding rules also apply to a
paragraph for telephone numbers.)
disability annuity, whether received before or after mini-
mum retirement age.
Withholding from certain lump-sum payments. If you
If you choose not to have tax withheld, or if you do not
leave the federal government before becoming eligible to
have enough tax withheld, you may have to make esti-
retire and you apply for a refund of your CSRS or FERS
mated tax payments.
contributions, or you die without leaving a survivor eligible
You may owe a penalty if the total of your with-
for an annuity, you or your beneficiary will receive a distri-
!
held tax and estimated tax does not cover most of
bution of your contributions to the retirement plan plus any
the tax shown on your return. Generally, you will
CAUTION
interest payable. Tax will be withheld at a 20% rate on the
owe the penalty if the additional tax you must pay with your
interest distributed. However, tax will not be withheld on
return is $1,000 or more and more than 10% of the tax
the interest if you roll it over to a traditional IRA or a
shown on your return. For more information, including
qualified plan by having OPM transfer it directly to the
exceptions to the penalty, see chapter 4 of Publication 505,
traditional IRA or other plan. See Rollover Rules in Part II.
Tax Withholding and Estimated Tax.
If you receive only your contributions, no tax will be with-
held.
If you retire and elect to receive a reduced annuity and a
Form CSA 1099R. Form CSA 1099R is mailed to you by
lump-sum payment under the alternative annuity option,
OPM each year. It will show any tax you had withheld. File
tax will be withheld at a 20% rate on the taxable part of the
a copy of Form CSA 1099R with your tax return if any
lump-sum payment received. (See Alternative Annuity Op-
federal income tax was withheld.
tion in Part II for information about this option.) However,
no tax will be withheld from the lump sum if you roll the
Choosing no withholding on payments outside the
taxable part over to a traditional IRA or a qualified plan by
United States. The choice for no withholding generally
having OPM transfer the taxable part directly to a tradi-
cannot be made for annuity payments to be delivered
tional IRA or other plan.
outside the United States and its possessions.
To choose no withholding if you are a U.S. citizen or
resident, you must provide OPM with your home address
Withholding from Thrift Savings Plan payments. Gen-
in the United States or its possessions. Otherwise, OPM
erally, a distribution that you receive from the Thrift Sav-
has to withhold tax. For example, OPM must withhold if
ings Plan (TSP) is subject to federal income tax
you provide a U.S. address for a nominee, trustee, or
withholding. The amount withheld is:
agent (such as a bank) to whom the benefits are to be
•
20% if the distribution is an eligible rollover distribu-
delivered, but you do not provide your own U.S. home
tion, or
address.
•
If you certify to OPM that you are not a U.S. citizen, a
10% if it is a nonperiodic distribution other than an
U.S. resident alien, or someone who left the United States
eligible rollover distribution, or
to avoid tax, you may be subject to the 30% flat rate
•
An amount determined by treating the payment as
withholding that applies to nonresident aliens. For details,
wages, if it is a periodic distribution.
see Publication 519, U.S.Tax Guide for Aliens.
Withholding certificate. If you give OPM a Form
However, you usually can choose not to have tax withheld
W– 4P – A, Election of Federal Income Tax Withholding,
from TSP payments other than eligible rollover distribu-
choosing withholding, your annuity will be treated like
tions. By January 31 after the end of the year in which you
wages for income tax withholding purposes. If you do not
receive a distribution, the TSP will issue Form 1099 –R
make a choice, OPM must withhold as if you were married
showing the total distributions you received in the prior
with three withholding allowances.
year and the amount of tax withheld.
Page 3
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