Federal Income Tax

Mandatory Contributions 

Mandatory contributions fall under Section 414(h) of the Internal Revenue Code (IRC) and are reported pre-tax, meaning they are not subject to federal income tax until they are distributed (when the employee retires or if they leave public employment and withdraw their NYSLRS membership).

• All ERS Tier 3, 4, 5 and 6 required contributions (not for service credit purchases) deducted on or after July 1, 1989, are 414(h) contributions. (Note: ERS members in Tiers 3 and 4 have reached their cessation date and no longer make contributions.)
• For PFRS Tier 3, 5 and 6 members covered under Articles 14 and 22, contributions deducted on or after October 1, 2013 are 414(h) contributions. (Section 414(h) does not apply to PFRS contributions made before October 1, 2013 and is not retroactive.)

Voluntary Contributions

Voluntary contributions are reported post-tax, meaning they are subject to federal income tax when the contributions are withheld from the member’s earnings.

New York State and Local Income Tax

Member contributions (both mandatory and voluntary) are subject to New York State and local income tax.

Social Security Taxes

Member contributions (both mandatory and voluntary) are subject to Social Security taxes.

Rev. 8/26