Notice of Right to Elect or Revoke Federal Tax Withholding

Monthly pension payments received from SDCERA, except for all or a portion of service-connected disability retirement payments, are subject to federal income tax withholding. If you are a U.S. citizen or a resident alien, you may choose not to have tax withheld, but you must provide SDCERA with your home street address (not a P.O. Box) located within the United States. Otherwise, SDCERA is required to withhold tax. If you do not make a tax election, your withholding will be calculated as if you are single with no adjustments.

IF YOU DO NOT WANT TO MAKE A TAX ELECTION OR CHANGE A PRIOR ELECTION, NO ACTION IS NECESSARY.

If you do not pay your taxes through withholding or do not pay enough tax this way, you may have to pay estimated tax. You may incur penalties under the estimated tax rules if your withholding or estimated tax payments do not meet Internal Revenue Service (IRS) requirements. Withholding only applies to the taxable portion of your benefit payment.

Federal tax election forms with instructions, worksheets and tax withholding tables can be found at https://www.irs.gov/pub/irs-pdf/fw4p.pdf. If you are a resident of the State of California, you can find state withholding forms at https://edd.ca.gov/siteassets/files/pdf_pub_ctr/de4p.pdf. You can submit your tax withholding forms by email to msc@sdcera.org or by mail to:

SDCERA

2275 Rio Bonito Way, Suite 100

San Diego, CA 92108

Withholding decisions can be complicated. The IRS provides a Withholding Calculator for taxpayers to estimate their withholding for federal income taxes. The Withholding Calculator can be found at https://apps.irs.gov/app/tax-withholding-estimator. If you have any questions regarding your tax withholding, you should contact a tax professional.

Distribution Code Change on Some Disability Retirement 1099 Tax Forms

SDCERA has changed the way disability benefits are reported on your 1099-R.  This change will not affect the taxes you pay on the disability retirement you receive. 

Form 1099-R reports to the IRS the retirement income you receive from SDCERA, the taxable amount of your benefit, and the taxes withheld. The IRS requires that payments be identified with what are called distribution codes. Distribution codes appear in box 7 of your 1099-R. Before 2023, SDCERA routinely coded all disability retirements using distribution code 3. To be compliant with IRS regulations, the distribution codes for some disability retirees changed from code 3 to either code 2 or 7 for 2023.  

This is a technical change that does not affect your taxes for 2023 or any prior tax years. You do not need to amend your tax returns for prior years. 

Why Was This Change Made?

Distribution code 3 is intended for those who are totally disabled. If you were granted a disability retirement because you cannot perform your regular job duties but can work in other capacities, distribution code 3 does not apply. In that case, your benefit will be coded with either distribution code 2 if you are under age 59 ½ or distribution code 7 if you are 59 ½ or older. Distribution code 3 is used by the IRS to determine eligibility for a tax credit that is only available to individuals receiving taxable disability benefits.

What Affects the Taxability of My Benefit?  

Whether your pension is taxable is based on the type of disability you were granted. If you were granted a service-connected disability retirement, the disability portion of your benefit is not taxable. If you were granted a non-service-connected disability retirement, your whole benefit is taxable. You can see the taxable amount of your SDCERA benefit in box 2a of your 1099-R.  

More on Distribution Codes 

The difference between code 2 and code 7 is that retirement payments made to a person who is under the age of 59 ½ are considered early distributions by the IRS. However, payments made by government pension plans like SDCERA fall within an IRS exception, so there are no early distribution penalties (i.e. 10% early withdrawal tax) associated with your SDCERA payment, even if code 2 is used. Code 7 is considered a normal distribution, so no penalties apply if that code is used.  

Again, the distribution code does not affect the taxability of your disability benefit. We apologize for any confusion this change may have caused.  

Maximum COLA Recommended to Board of Retirement

The SDCERA Board of Retirement will take action on the maximum cost-of-living adjustment (COLA) for retirees at their February 15 meeting.

If approved, it would mean:

  • Tier I, II, and A members would receive the maximum COLA of 3% and 2.11% goes in the COLA bank. 
  • Tier B, C, and D members would receive the maximum COLA of 2% and 3.11% goes in the COLA bank. 

The COLA would go into effect on April 1, and retirees will see it in their pension payments starting April 30, 2024. 

To learn more about COLA and the COLA bank, click the button below.

SDCERA Issues RFP for Actuarial Auditing Services

The San Diego County Employees Retirement Association (SDCERA) is seeking proposals from qualified actuarial firms for actuarial auditing services.

Click the links below to see the Request for Proposal (RFP) and related documents.

Important Dates

Request for Proposal (RFP) IssuedDecember 4, 2023
Questions Due DateDecember 15, 2023
SDCERA ResponsesDecember 21, 2023
Proposal Submission Due Date  January 12, 2024, at 5 pm PST
SDCERA Proposal Evaluation, Selection, NegotiationJanuary 13-31, 2024
Execute Contract AgreementFebruary 9, 2024

Background

SDCERA is a public retirement system established by the County of San Diego (County) on July 1, 1939, pursuant to California’s County Employees Retirement Law of 1937. SDCERA administers retirement, disability, and survivor benefits for more than 50,000 members who are active, retired, or former employees of the County (SDCERA’s Plan Sponsor) or one of SDCERA’s four Participating Employers (the San Diego Local Agency Formation Commission, the San Dieguito River Park Joint Powers Authority, the San Diego County Office of Education, and the Superior Court of California – County of San Diego) or their beneficiaries. SDCERA has over $16 billion in assets under management for current and future benefits. SDCERA is governed by an independent, nine-member Board of Retirement with two alternate members.

SDCERA Issues RFP for Disability Counsel

The San Diego County Employees Retirement Association (SDCERA) is seeking proposals from qualified law firms to provide legal services related to SDCERA’s disability retirement hearing process.

Click the links below to see the Request for Proposal (RFP) and related documents.

Important Dates

Request for Proposal (RFP) IssuedJanuary 3, 2024
Questions Due DateJanuary 12, 2024
SDCERA ResponsesJanuary 17, 2024
Proposal Submission Due Date  January 26, 2024, at 5 pm PST
SDCERA Proposal Evaluation and InterviewsJanuary 29-February 2, 2024
SelectionFebruary 5-7, 2024

Background

SDCERA is a public retirement system established by the County of San Diego (County) on July 1, 1939, pursuant to California’s County Employees Retirement Law of 1937. SDCERA administers retirement, disability, and survivor benefits for more than 50,000 members who are active, retired, or former employees of the County (SDCERA’s Plan Sponsor) or one of SDCERA’s four Participating Employers (the San Diego Local Agency Formation Commission, the San Dieguito River Park Joint Powers Authority, the San Diego County Office of Education, and the Superior Court of California – County of San Diego) or their beneficiaries. SDCERA has over $16 billion in assets under management for current and future benefits. SDCERA is governed by an independent, nine-member Board of Retirement with two alternate members.

SDCERA Issues RFP for IBM FileNet and Datacap Services

The San Diego County Employees Retirement Association (SDCERA) is requesting bids from qualifying firms to perform administration, maintenance, support, and consulting services for its IBM FileNet and Datacap application.

Click the links below to see the request for proposal (RFP) and related documents, or download a zip file with all the documents.

Zip File with All RFP Documents

Important Dates

Request for Proposal (RFP) IssuedSeptember 11, 2023
Questions Due DateSeptember 25, 2023
SDCERA ResponsesSeptember 29, 2023
Proposal Submission Due Date  October 20, 2023, at 5 pm PST
SDCERA Proposal EvaluationOctober 23-November 3, 2023
Selection, Negotiation, and Award November 6-17, 2023
Execute Contract AgreementNovember 17, 2023
Vendor-to-Vendor Knowledge Transfer November 20-December 29, 2023

Background

SDCERA is a public retirement system established by the County of San Diego (County) on July 1, 1939, pursuant to California’s County Employees Retirement Law of 1937. SDCERA administers retirement, disability, and survivor benefits for more than 49,000 members who are active, retired, or former employees of the County (SDCERA’s Plan Sponsor) or one of SDCERA’s four Participating Employers (the San Diego Local Agency Formation Commission, the San Dieguito River Park Joint Powers Authority, the San Diego County Office of Education, and the Superior Court of California – County of San Diego) or their beneficiaries. SDCERA has over $16 billion in assets under management for current and future benefits. SDCERA is governed by an independent, nine-member Board of Retirement with two alternate members.

New Trustee Appointed to Board of Retirement

On August 29, the San Diego County Board of Supervisors appointed a new trustee to serve on the SDCERA Board of Retirement. Cheryl Coney will serve in the ninth seat for a three-year term, which expires on June 30, 2026. 

Ms. Coney is a San Diego native and works for the California Teachers Association (CTA). Ms. Coney has experience in community and worker organizing and has worked in the labor movement for over a decade. Before joining CTA, Ms. Coney worked for the National Education Association. She also served as the project director for the Union Women’s Leadership Educational Project and as a labor educator at the Washington State Labor Education and Research Center. 

Ms. Coney holds a Bachelor of Arts degree in Political Science and History from Rutgers University and a Master’s degree in Interdisciplinary Studies from the University of Washington.

SDCERA Reports Investment Returns for Fiscal Year 2022

SDCERA reported an investment return of 9.6 percent for the fiscal year ended June 30, 2023. SDCERA’s assets under management were $15.9 billion.

Based on FY 2023’s return, SDCERA’s three-year investment return was 7.5 percent, the five-year return was 5.8 percent, and the 10-year return was 6.5 percent, all as of June 30, 2023. These investment returns are annualized and net of fees.