Chapters

00:00 Introduction to COLA Notice

01:00 Key Sections of the Notice

03:00 Adjusting Tax Withholding

05:00 Important Deadlines and Actions

07:00 Conclusion and Call to Action

Transcript

Hi everyone, I'm Ryan Earley, host of the PursePro YouTube channel. In our recent videos, we've covered the Mississippi PERS, cost of living adjustment, or COLA in depth. We've discussed who's eligible, whether you get the simple or compounded 3% rate, and how to calculate your total COLA payment. But what happens when that official notice from PERS shows up in your mailbox? Well today we're going to go step by step through the COLA notice you receive each year explaining what it means and what action you may need to take. Let's get started.

Before we jump into the details, make sure you hit that subscribe button so you don't miss any of our future videos. Our goal with this channel is to provide you with short, easy to understand, financial education videos that are relevant to PERS members like you.

Disclaimer. This video is for educational and informational purposes only. Neither the host nor this YouTube channel are officially affiliated with, endorsed by, or sponsored by the Public Employees Retirement System of Mississippi. Always consult a qualified professional for personal advice specific to your situation.

At retirement, you had a choice to receive your COLA as a small adjustment added to your monthly check or as a single annual lump sum payment paid out each December. The notice we will be reviewing today is specifically the one for those who elected the lump sum payment option.

PERS typically sends this individualized Cost of Living Adjustment or COLA Notice out in late June or early July of each year. It's your official statement informing you of the total COLA amount you will receive that December. The notice will clearly state that it is a Cost of Living Adjustment Notice and provide your recipient ID. If you want to know more about the eligibility requirements, please go back and watch our previous videos.

Let's break down the key sections of the COLA notice. It's usually a single sheet that includes all the numbers you need to know. The most important part of the notice is the table that details your payment.

As you can see, are four critical numbers here. Item 1, Cost of Living Adjustment. This is the total COLA for the current fiscal year. Watch our previous videos to understand how your COLA is calculated. Item 2, Gross Payment Amount. This is the total pre-tax amount of your COLA for that fiscal year and it includes the COLA amount noted above. Item 3, Estimated Federal Tax Withholding. This is the amount that PERS plans to withhold for federal income tax purposes. It's based on the marital status and exemption preferences you already have on file for your regular monthly benefit payment. Item 4, Net Payment Amount. This is the amount you will actually receive in December after taxes have been withheld.

The notice also confirms the payment date, is typically December 15th or the closest banking day. This lump sum will be sent by direct deposit or mail matching the method you use for your regular monthly benefit.

If you review the notice and decide you want to adjust the estimated federal tax withholding from your lump sum COLA, you have the option to do so. This is the critical piece where you may need to take action. Now why would you want to change the withholding? Maybe you're expecting higher income this year, or maybe you prefer to handle the tax liability yourself later when you file your income tax return.

Whatever the reason, PERS provides a simple form right on the COLA notice itself for this purpose. To change the amount withheld, you must, step one, indicate the new amount. Write in the preferred dollar amount you want withheld from the lump sum payment. Step 2. Sign and date. Sign and date the Adjustment Request Form. Step three, return the form. Detach and return the completed form to the PERS office address listed.

It is crucial to remember the deadline for this withholding adjustment. The request form must be returned to PERS by the last working day in October of that same fiscal year. If you miss this deadline, your tax withholding will remain as listed in the estimated amount on your COLA notice. Any request to change the lump sum COLA withholding does not affect the tax withholding from your regular monthly base benefit payments.

If you didn't receive your COLA notice by mid-July, or if you simply misplaced it, be sure to contact PERS to request a duplicate be mailed to you.

Understanding your COLA notice is just one part of tracking your retirement benefits. Our next video will be on deciding between choosing monthly vs. lump sum payment frequency for your COLA and what you should consider in making that decision. Make sure you subscribe so you don't miss that one. If you found this video helpful, can thank me by liking the video and sharing it with other PERS members. If you have a follow-up question about COLA, PERS, or anything else related to personal finance that impacts PERS members, please visit our website at perspro.ms and submit your question for a future episode. Thank you for your valuable public service to the state of Mississippi. We'll see you next time.