Do You Pay Kansas Taxes on KPERS Retirement Checks?

KPERS is the acronym for the Kansas Public Employees Retirement System, which provides defined-benefit plans for Kansas public employees, police, firefighters and judges. It has ​325,000​ members -- active, inactive and retired -- and has an investment portfolio of ​$20 billion​ in assets. Benefits, taxation and funding requirements are controlled by the Kansas state legislature. Local public employers and employees are required to contribute at a rate set by the legislature. As of August 2021, KPERS is only ​53 percent​ funded.

What's the Kansas Pension Tax Rate on a KPERS Pension?

Kansas does not charge income tax on state pensions, so your KPERS pension is exempt from state income tax. However, though exempt from Kansas state taxes, if you leave Kansas and establish residency in another state, your pension may be subject to that state's taxes, depending on state law. Your pension also is not exempt from federal taxes, and they are not withheld from your pension check. Each year you will receive a 1099-R form to use for your federal taxes. You must pay them when you file your taxes or elect to have federal taxes withheld from distributions.

How Can You Retire With Full Benefits From KPERS?

There are three ways you can retire with full benefits from KPERS.

If you have one year of service and are ​65 years old​, you get full benefits. If you have at least ​10 years​ of service and you are ​62 years​ old, you are also entitled to full benefits. The third way to retire with full benefits, at a younger age, is through the point system. Retirees from KPERS can choose between receiving the maximum monthly retirement distributions or taking a lump sum and receiving reduced monthly payments thereafter.

In addition to the option for the maximum monthly retirement or lump sum, KPERS also offers the option to provide for loved ones after the retiree passes away. There are two additional options available, coverage for a joint survivor and a life certain option. Covered individuals should carefully consider their retirement needs when selecting a plan because the decision cannot be changed once a plan is selected.

How Does the KPERS Point System Work?

The point system allows you to retire with full benefits even if you have not reached retirement age. Beginning with your first year in the KPERS system, you receive a point for each year of service. When the points from your years of service, added to your age, equal ​85,​ you can retire.

For example, if you started your public service job when you were 25 and you worked for 30 years, at age 55 your years of service plus your age would equal 85, and you would be eligible for retirement with full benefits.

For retirees who are interested in continuing to work, KPERS allows for retired employees to apply for post-retirement work after a waiting period. There are no limits on earnings, and working retirees will not make any further contributions nor earn more KPERS service.

What About KPERS Early Retirement?

You can retire early from the KPERS system with ​10 years​ of service, but you will do so with a reduced benefit. The benefit reduction is graduated based on your age only.

If you are 55 when you decide to retire, but have not yet attained 85 points, your pension will be reduced ​41 percent​, so if your monthly benefit was $1,000 your reduced benefit would be $590. From age 55 to 60 your pension is reduced by ​0.6 percent​ for each month you are between ages 55 and 60. From 60 to 62 your pension is reduced by ​0.2 percent​ for each month you are between ages 60 and 62 so if you retired at age 61, your $1,000 pension benefit would be reduced to $980.