What Do the Items On My ACERA Direct Deposit Statement or Check Stub Mean?
Wells Fargo Benefit Payments
Your last check or direct deposit payment from Wells Fargo will be on November 30, 2022. Below you can find a sample check stub with explanations of what items on your check stub mean.
JPMorgan Benefit Payments
Starting December 30, 2022 and going forward, your ACERA benefit checks or direct deposit statements will be issued by JPMorgan. Below you can find a sample direct deposit statement and check stub with explanations of what items on your statement mean.
Cost of Living Adjustments (COLA)
The Cost of Living Adjustments is an increase made to your retirement allowance every April 1. Each year, the change from December to December in the San Francisco Bay Area’s Consumer Price Index (CPI) is rounded to the nearest half percent and becomes the COLA amount. The amount is announced on this page in the first week of February each year.
Annual COLA Announcement
First week of February
Annual COLA Date
April 1
Maximum Annual COLA
| Tier 1 and Tier 3 | 3% |
| Tier 2 and Tier 4 | 2% |
2020–2021 CPI Change
4.00%
2022 COLA Increase
| Tier 1 and Tier 3 | 3.0% |
| Tier 2 and Tier 4 | 2.0% |
COLA Reflected in Retirement Payment
April 29, 2022
More COLA Info
When is the Annual COLA Announced?
The COLA amount that will be applied on April 1 is announced on this page in the first week of February each year.
COLA Maximums and the COLA Bank
The maximum statutory annual COLA increase is 3% for Tier 1 and 3 members and 2% for Tier 2 and 4 members. In years where the CPI increase is greater than these percentages, the difference between your maximum and the rounded CPI increase is automatically banked for future years. The banked percentage is used in years when the COLA is less than the maximum. In 2022, Tier 1 and 3 members will bank 1% and Tier 2 and 4 members will bank 2%.
New Retirees
If your first day of retirement is April 1 or before, you will get the COLA for that year. If your first day of retirement is April 2 or after, you’ll have to wait for next year’s COLA.
Long-Time Retirees and the Supplemental COLA
Many long-time retirees will be eligible for an additional non-vested Supplemental COLA.
What is the Consumer Price Index (CPI)?
The CPI is a measure of price inflation. Specifically, it is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services such as food, housing, apparel, transportation, medical care, and education. The CPI is measured by the U.S. Bureau of Labor Statistics, which produces CPI figures for the U.S as a whole and for major urban areas such as the San Francisco Bay Area. ACERA bases its COLA on the change in CPI for the Bay Area from December to December.
Supplemental COLA
The Supplemental Cost of Living Adjustment (Supplemental COLA) maintains retirees’ purchasing power at no less than 85% of their original pension allowance. The Supplemental COLA is a non-vested (non-guaranteed) benefit which is evaluated and reauthorized annually by the Board of Retirement. It is funded by the Supplemental Retiree Benefits Reserve (SRBR). The Supplemental COLA is a separate benefit from the vested COLA.
Annual Supplemental COLA Date
April 1
Who Receives 2022 Supplemental COLA?
| Tier 1 | Retired on or before 04/01/1981 |
| Tier 2 | Retired on or before 04/01/2001 |
Supplemental COLA Reflected In Retirement Payment
April 29, 2022
Supplemental COLA
What Is Purchasing Power?
Purchasing power is the value of your dollars in terms of how much stuff they’ll buy. In the context of the Supplemental COLA, if it takes more than $1.15 today to purchase what $1.00 would purchase at the time of your retirement, you’ve lost at least 15% of your purchasing power. When this occurs, you may qualify for a Supplemental COLA to make up the difference and bring you back to 85% of your purchasing power.
How Do You Qualify For the Supplemental COLA?
As noted is the vested COLA posting, annual CPI increases that exceed the maximum legal percentage for your tier (2% or 3%) are banked for use in years that the CPI increase is below the maximum. So if the CPI is 4% and you can only get a 3% COLA, then 1% goes in your COLA bank. If you have a banked amount of more than 15%, you qualify to receive Supplemental COLA.
How Much Supplemental COLA Will You Receive?
Your Supplemental COLA will be calculated individually each year based on your original retirement benefit, any accumulated COLA, and the percentage you have in the COLA bank. Your Supplemental COLA amount from the previous year has no connection with your new Supplemental COLA amount.
How Is This Year’s Supplemental COLA Different From Last Year’s?
Tier 1 and Tier 2 retirees who received a Supplemental COLA in 2021 will also receive a Supplemental COLA in 2022. Additionally, the cutoff date for Tier 2 members moved forward one year, so now Tier 2 members who retired between 04/02/2000 and 04/01/2001 will also receive a Supplemental COLA.
Tax Considerations For Your Retirement Allowance
Since you made your contributions to the retirement fund on a tax-deferred basis, your ACERA pension allowance is subject to federal and state income tax (where applicable). If you made any part of your contributions using post-tax dollars (usually with a service credit purchase), a proportionate amount of your pension allowance is non-taxable.
Income Tax Withholding
As a part of the retirement application process, you specified how much federal and California state income tax to withhold from your retirement allowance check (California is the only state income tax we can withhold). You can update your withholding at any time using the processes below. Withholding changes made by the 10th of the month will be effective on your next monthly retirement allowance. Be sure to read the withholding form’s instructions carefully, and consult your tax advisor if you have questions.
How to Update Your Federal Income Tax Withholding
- Use the IRS Tax Withholding Estimator to calculate your withholding. It works really well.
- Complete one of the forms below. Avoid paper, ink, scanning, and hassle with the DocuSign E-Form.
Withholding Flat Amounts
Due to IRS rules, ACERA does not allow you to withhold a flat amount with no allowances. This means you MUST enter a number in the Allowances Box (Box 2).
A workaround for this is to enter additional allowances in Box 2 until your withholding is below the flat amount that you’re looking for, and then add an Additional Amount in Box 3 to bring your withholding up to the flat amount you’re looking for. Be careful, because you may end up owing taxes (and possibly penalties) if ACERA doesn’t withhold enough. You can submit multiple withholding forms to ACERA until your withholding is adjusted to your needs.
How to Update Your California Income Tax Withholding
The only state income tax ACERA can withhold is California’s. If you live in another state that collects state income tax, you are responsible for filing and paying your taxes with your state of residence.
- Complete one of the forms below. Avoid paper, ink, scanning, and hassle with the DocuSign E-Form. Either form contains a worksheet starting on page 3 that will help you calculate your withholding.
ACERA Reports Your Retirement Income on Form 1099-R
Each year, federal law requires ACERA to report income to its payees with Form 1099-R, regardless of their taxable status. This includes payees on duty disability for whom there may be no tax liability whatsoever. Your 1099-R becomes available in your online account in mid to late January. We also mail the 1099-R to payees on or before January 31.
Payees may also receive multiple 1099-R forms for payments resulting from a member’s death or if benefit adjustments are paid during the same tax year.
If You Need a Duplicate 1099-R
Log in to your online account to access all of your past 1099-Rs. Or you may contact us to request us to mail a copy to your current address. ACERA cannot fax or e-mail this form to you.
ACERA Cannot Discuss Specific Personal Information With You Over the Phone
You need to submit inquiries to ACERA Member Services in writing.
Taxation if You Live Outside the United States
If you are considering moving out of the United States and want to avoid the possibility of 30% taxation on your pension, you must make sure you have the following documents on file with ACERA.
- U.S. Certified Birth Certificate; verifying you were born in the United States, or submit a W-9 Form
- If you are a Non-Resident Alien, a copy of your green card
A person who is not a U.S. Citizen or resident alien but will be residing at a non-U.S. address is subject to a mandatory federal tax withholding on a U.S. income source at the rate of 30%. The IRS requires these individuals to complete a W-8BEN Form and it must be submitted to ACERA. For non-citizens and non-resident aliens, a reduced tax rate including a total tax exemption may apply if there is a tax treaty between the non-U.S. resident’s country and the United States.