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Increase in Federal withholding on pensions
Old 02-04-2011, 06:05 PM   #1
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Increase in Federal withholding on pensions

I receive a federal CSRS survivor pension. Mr B receives a NY state pension for his 22 years of service for the county.

We noticed that there was an increase in federal withholding effective Jan 1, 2011 on both of our retirement annuity statements. The amount was approx $45 on each pension (1 federal, 1 state).

Mr B researched the IRS site looking for the reason why. No luck.

Does anyone know why federal witholding was increased on retirement benefits?
Was it also increased for the still w*rking folks also?

This post is not designed to spark a political discussion.
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Old 02-04-2011, 06:18 PM   #2
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I don't have any links or documentation, but I thought it was the end of some type of reduction in withholding that the Obama administration had passed to stimulate the economy.
With the expiration of that reduction in withholding and the new 4% withholding on SS it is almost a wash....unless you don't have SS taken out anymore.
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Old 02-04-2011, 06:21 PM   #3
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Lengthy, confusing discussion at FedSoup
increased csrs withholding 2011 - FederalSoup.com - Page 1
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Old 02-04-2011, 06:46 PM   #4
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Husband's CSRS pension also had $45 more Federal tax taken out of it this month (He doesn't have state tax withheld - we pay estimated quarterly taxes to cover it).

My biweekly take-home went down $15 due to health care premium increase and since I'm CSRS, I didn't get a payroll tax decrease

Thus, both of us have taken "pay cuts" while our "operating expenses" have risen.

Amethyst

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Originally Posted by freebird5825 View Post
I receive a federal CSRS survivor pension. Mr B receives a NY state pension for his 22 years of service for the county.

We noticed that there was an increase in federal withholding effective Jan 1, 2011 on both of our retirement annuity statements. The amount was approx $45 on each pension
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Old 02-04-2011, 06:54 PM   #5
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The official reason is "Please be advised that of 12/31/2010 the 'Making Work Pay' tax credit, a provision under the American Recovery and Reinvestment Act, has expired. As a result, recent updates to the 2011 federal income tax withholding tables may cause you to notice a change in your federal withholding amount."

I never had the credit taken out of my previous pension payments so I'm at a complete loss on this whole situation.
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Old 02-04-2011, 07:03 PM   #6
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I just sent an email to Kay Baily Hutchinson asking her about this. I'll let you know when I hear something (she's pretty good about answering). I suggest the rest of you contact your congressmen also.
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Old 02-04-2011, 07:18 PM   #7
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Here's the reason according to Federal News Radio:

Congressional Delay Eats Into Retirees Checks
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Old 02-04-2011, 09:55 PM   #8
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I remember when they decreased the withholding last year and yes it was increased this year. That decrease wasn't a lowering of my Fed tax obligation so I need to throw a larger piece of steak at the beast shortly. I am sure we weren't the only folks this happened to.
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Old 02-04-2011, 10:13 PM   #9
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My withholding has been pretty much the same percent of my pension the last five years until this last check. I realize this is a withholding issue and not a tax obligation issue, which is the only reason I'm not completely unhappy.
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Old 02-05-2011, 07:59 AM   #10
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I change my withholding as necessary throughout the year using specific dollar amounts to be withheld - very easy to do online with OPM. I typically try to owe a few hundred bucks at tax time rather than getting a refund.
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Old 03-18-2011, 03:21 PM   #11
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This is an excerpt from the reply I just got from Kay Bailey Hutchinson. Let me know if you want me to post the message in its entirety.

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Unfortunately, I have heard from many Texans who seen their withholding taxes increase in 2011, rather than decrease. In particular, many have seen their pension benefits decrease because of increased withholding. In 2009 and 2010, although the Making Work Pay tax credit did not apply to pensioners, the IRS gave pension plan administrators the option of increasing withholding for pension recipients or allowing pensioners to make the adjustment when they file their tax returns. In 2011, the IRS is requiring increased withholding in their tax tables, leading many to receive less in their regular pension payments.
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Old 03-18-2011, 03:29 PM   #12
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Quote:
Unfortunately, I have heard from many Texans who seen their withholding taxes increase in 2011...
Lookin' a this, I seed my Senator talks Texan.
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Old 03-18-2011, 04:23 PM   #13
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Lookin' a this, I seed my Senator talks Texan.
You're bad....... You're going to have to go sit in time-out in the New Mexico corner.
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