The 100,000 federal retirees in the metro Washington area may soon be able to have state taxes withheld from their monthly annuity checks.
Thirty-three states now tax the annuities of federal retirees who get $18 billion a year in benefits. Currently retirees who must pay state taxes have to file quarterly returns, or make big end-of-year lump sum payments.
Annuities, unlike Social Security benefits, are also subject to federal income tax. The government already deducts federal taxes from the pension checks of U.S. retirees who request it.
The voluntary withholding--which would be a financial bonanza for states--must be requested by individual states.
So far only Maryland, Michigan and the District of Columbia have returned signed agreements to the Office of Personnel Management requesting the withholdings to begin. There are 200,000 annuitants residing in the two states and D.C.
OPM says that 14 other states have "expressed interest" in the voluntary withholding, but have not signed formal agreements as yet.
Once the program gets rolling, the government will make monthly deductions (the minimum amount is $5) and turn that money over to the states every three months.
According to estimates from the Congressional Research Service, states would get about $10 million a month in tax withholding if 400,000 retirees (about one-third of the total number of retirees) join in the plan.
OPM says that retirees will be getting information on the tax withholding program from their state tax offices, not from the government. Once agreements are reached between individual states and the government, the withholding--based on amounts specified by annuitants--will begin. Actual startup time could be a couple of months, even for states that have signed agreements.
OPM will report the amount withheld from annuities on an annual basis on W-2P forms which go to retirees to show how much federal tax has been withheld.
If you are interested in getting the program going in your state, contact its tax collecting agency. The withholding was authorized by Public Law 97-35, passed as part of the Omnibus Budget Reconciliation Act of 1981.
Federal Executive Institute: Presidential counselor Edwin Meese says the government will buy the FEI facility in Charlottesville (it is now leased) and keep it running as the paramount staff college for up-and-coming career U.S. officials. Meese made the announcement yesterday at the luncheon of the Federal Executive Institute Alumni Association.
At one time FEI was slated to be closed for budgetary reasons. But its powerful alumni association lobbied to keep it going.
Meese also said that he will personally push for improvement of relocation allowances for government workers who are transferred. Many federal workers get moved as part of their job and some complain that relocation benefits don't meet the actual cost of moves.
A lot of the complaints come from the highly mobile FBI and Secret Service. H. Stuart Knight, retired head of the Secret Service, is currently president of the FEIAA.
COLA Cutbacks: National Association of Retired Federal Employes will have a special meeting May 5 (at the Fire Station in Annandale) to talk about congressional plans to reduce future cost-of-living raises for government retirees.
NARFE Vice President Jack Goldberg, long-time Civil Service Commission official and expert on retirement matters, will outline problems facing the U.S. retirement program. Retirees who want to attend should check with Don MacCloskey, 751-4757.
TV Tonight: WJLA-TV (channel 7) promises a prime-time blockbuster at 8 this evening. Reporter John Spiropoulos, will be talking about furloughs and firings with OPM chief Donald J. Devine and A. Lee Fritschler of the Brookings Institution.