June Shoji

Effen To clarify that my client worked for LA County and this is for LACERA which is their pension plan. All counties in State of CA are making similar adjustment but each county is handling a little differently on how retirees can make the adjustment.

Effen Thanks for reply. This is pertaining to recent adjustments to a pension plan for retirees who had on call time calculated in determining their pension dollars. Was a claim or review on whether other types of services should be added and entire on call service was denied retroactively. Retirees had to pay back lump sum for this portion of pensions received or elect to have a reduction in future dollars for next ten years. This is new with LA County pension. I could be wrong about the reasoning for adjustment but my client had to pay a large amount back lump sum and we are wondering how to adjust for the taxes already paid on these amounts for 2022. I understand this was an impact for entire state of CA at various county levels.

When pension $ are requested to be paid back retroactively due to policy change, etc. how are the pay backs treated at tax time. I didn't see any prior year adjustments on the 1099R. Some employees had the option of reducing future pension $ until paid back. Others had the option of paying back lump sum. How would the tax $ be adjusted on the lump sum pay back. Would the 1099R show a reduced gross income in box 1 or would another document be issued for this pay back?