by KTRS. However, if you are planning to retire with an effective retirement date of July 1, your application must be on file with KTRS by June 1. Additionally, given the increasing number of June 1 retirements, administrative regulations are currently being promulgated that will, beginning in 2007, require members to file their retirement applications by May 1 in order to be eligible for a June 1 retirement date.

These one-month advance filing deadlines for June 1 and July 1 retirement dates provide KTRS staff with the time they need to accurately and timely process retirement applications of all new retirees. Members who retire prior to July 1st, will have a prorated reduction in service and possibly a prorated reduction in salary.

Disability Retirement
To retire for reasons of a disabling condition that prevents your continued employment, you must first obtain and complete an "Application for Disability Retirement". If approved, disability retirement takes effect on the first day of the month following the month in which the application is filed with KTRS.

Document Requirements
In addition to the application for retirement (Form 23 for service retirement and Form 21 for disability retirement), the following documents must be on file in the KTRS office prior to your retirement:

1. A copy of your official, government certified birth certificate; -- and --
   
2. A copy of your official, government issued Social Security card. (These cards bear the seal of the Social Security Administration).
   
3. A copy of your official, government certified marriage license if married.
   
4. For service retirement, if choosing a joint and survivor retirement option [i.e. Options III, III(a), IV or IV(a)], a copy of the beneficiary's official, government certified birth certificate must also be filed with KTRS prior to your retirement. For disability retirement, this document is required for any primary beneficiary.

Application Processing
Once KTRS has received your application and completed the necessary computations, you will be notified in writing of your monthly annuity amount based on the retirement option you selected. This information should be received prior to your first annuity payment. After the 15th day of the month that you have selected for retirement, you may not change your status as a retired member of KTRS, nor may you change the retirement option you selected unless there is a later qualifying event allowing you to do so as specified by law or administrative regulation.

Tax Aspects

Active Member Contributions
Under KRS 161.540(2), and in compliance with section 414(h) of the United States Internal Revenue Code, employers shall pick up these member contributions for all compensation earned on or after August 1, 1982, and these contributions shall be treated as employer contributions for tax treatment under the Internal Revenue Code and KRS 141.010(10). As such, member contributions are not taxed until they are received by the member.

Retirement Allowances, Beneficiary and Survivorship Payments
All persons receiving benefits from KTRS will receive a Form 1099R, “Distributions From Pensions, Annuities, Retirement . . .etc.” on an annual basis. The 1099R reports the member’s gross benefits received, taxes withheld, federal taxable income and income subject to Kentucky state income taxes. KTRS mails these statements the last week of January. The Internal Revenue Service (IRS) and the Kentucky Revenue Cabinet are also provided with this information.

Federal
Upon retirement you must report your federal taxable income to the IRS. Under federal tax law, members must pay taxes on their tax-sheltered annuities immediately. If you made contributions prior to August 1982 or made personal payments to the retirement system, KTRS will exclude a small portion of your retirement annuity from taxation over your expected lifetime or that of your beneficiary.

When you retire, you must complete a Form W-4P instructing KTRS how to withhold federal taxes from your annuity. If you elect to withhold, KTRS will withhold federal taxes on the taxable portion of your annuity as calculated using the “simplified general rule”.

State of Kentucky
Your retirement annuity is exempt from Kentucky income tax if you retired before January 1, 1998. Members who retire after January 1, 1998 will need to determine IF they owe Kentucky income tax. Due to a state pension exclusion on the Kentucky Income Tax Form 740, KTRS estimates it will take several years before most retirees who retire after January 1, 1998 will pay Kentucky state income taxes. Please reference the current year Kentucky income tax form instructions for the amount of the pension income exclusion.