The government has hired an outside firm, Westinghouse Information Services, to help it get word to retirees that their monthly checks will be subject to automatic federal tax withholding starting in April.
The private company, according to the Office of Personnel Management, will get 26 cents for each "item" it processes from among some 1.7 million federal retirees, including more than 60,000 in this area.
Information kits that retirees will receive give them the option of setting deduction levels from their pension checks, or declining withholding if they wish to continue making quarterly tax payments to the IRS.
Approximately 650,000 retirees already have tax withholding arrangments with Uncle Sam. Those will continue unchanged unless retirees advise OPM otherwise.
Retirees who do not now have any federal tax withheld will be subject to automatic withholding beginning in April, at the rate of a married person with three withholding allowances, if they fail to answer the OPM questionnaire. The deadline is Feb. 9th.
OPM will handle mailings to annuitants who already are having tax withheld. But the 1,055,000 who do not have any current withholding from monthly annuity checks will be contacted by Westinghouse Information Service. It is using addresses supplied by OPM.
Retirees who wish to set their own deductions, or to decline the automatic withholding, are supposed to send their election forms back to Westinghouse Information Services, P.O. Box 30, Iowa City, Iowa.
Many retirees, who are accustomed to dealing with the OPM in Washington, have been confused by receiving the information kits from the company, as well as by its Iowa City return address. Letters advising them of the new law on withholding are just starting to arrive in the Washington area.
OPM said that it hired the firm because it doesn't have the staff to deal with all the material by the deadline. The agency currently is swamped processing insurance changes filed by employes and retirees as a result of the health insurance open season that ended Dec. 23. It also is handling what may be a record number of January retirements from workers who waited until this month to get in on the Medicare coverage benefit.
Although the OPM-Westinghouse operation is supposed to be a one-time deal, it is possible that other agencies with mass-mailings will decide to hire contractors to do their work in the future. The Reagan administration has made no secret of its desire to have government agencies contract more work to the private sector.