The IRS is going to be required to clarify the potential conflict that arises from the Obama administration's "Making Work Pay" when it comes to retirement systems like PERS.
From PERS to me today:
"The new tax withholding tables incorporate the Making Work Pay credit. This new credit applies only to earned income. Under the Internal Revenue Code (IRC), pension income is specifically excluded from the definition of earned income. However, the IRC also indicates that withholding from pension payments is to be administered as if the pension payments were a payment of wages by an employer to an employee for the appropriate payroll period. This creates a potential conflict that has been presented to the IRS for clarification and direction on whether pension systems like PERS should implement the new withholding tables."
So until the IRS clarifies this further, it is not at all a given that PERS benefits will be affected by the new rules.
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