Colorado pension tax questions.... (fit in, taxi, income tax)

[CAVA1990]

Originally Posted by mes3fils

Ok, my husband will only be 41 at retirement/drawing age. It is a pension from our local police dept, is that considered government?

How does this pertain to us and how we'd be taxed if we moved to CO? Thanks so much.

Seems kind of crazy that someone should get a pension at only 41 years old (unless it's because they're incapacitated and can no longer push a pen or punch a keyboard). Typical government largesse. You'd never see that in the private sector. I think I'm a liberal on the federal level and a tea partier on the local level as it seems to me local public employees get away with way too much, particularly cops and prison guards. I guess that's why so many state and local governments are in such a fiscal mess.

[jazzlover]

Originally Posted by bterence

Question on State Tax. I am a Colorado resident and earn income from Wyoming State Govt, do I have to pay state tax on that income?

Yes, no ifs ands or buts about it.

[plainsman48]

Originally Posted by CAVA1990

Seems kind of crazy that someone should get a pension at only 41 years old

So, he has his 20-yr pin. So, do I - but I didn't stop working.

[Bob from down south]

Originally Posted by Mike from back east

...I say "sort of" because you must be 55 years of age and because there are limits to how much is exempt. Oddly enough, I found it on a state of Massachusetts site....Massachusetts Department of Revenue

The table summarizes the "out of state" exemptions for government pensions, if any, for all the states. Pretty cool info. This link is going into my favorites list.

Found it by googling [ Colorado +pension +exemption ]. I LOVE google, wish I'd bought stock in it long ago.....

In the case of Colorado, the site says: "All out-of-state government pensions qualify for the pension exemption: age 55 to 64 qualify for a $20,000 exemption; age 65 or older qualify for a $24,000 exemption." That's just one more of the reasons why we decided to retire here.

No personal income tax at all: NV, SD, TX, WA and WY.
Partial exemptions on government pensions: CO, OK, MT and UT.
Fully taxed: AZ, CA, ID, KS, NE, NM and ND.

s/Mike

Mike, that the table you linked is for other state government pensions. I know for a fact that Kansas, for example, does not tax federal government civil service, military, or Kansas state/local pension income, but does fully tax income from state and local government employee pensions coming from outside of Kansas. You listed KS above as "fully taxed," which is not correct for federal and some other retirees.

And a couple states (North Carolina comes to mind) have special exemptions for some of our military retirees and/or VA disability retirees.

So a word to the wise...if you're not familiar with the legalese, a consultation with a tax lawyer or at least with an acknowledged tax expert is a good idea before you load up the U-Haul.

A little Googling can be a dangerous thing.

[Jimrob1]

Colorado gives a hefty break on retirement income, and since it begins at age 55 that is an added bonus. Many states give little to nothing. Even Arizona the retirement state it is gives little. Up to $2500 and its only on certain pensions. Most retirees in that state end up paying income tax on their entire pension. I wouldn't be surprised if many retirees researching retirement locations, have no idea of the income tax break in Colorado.

[GeorgiaTransplant]

Originally Posted by CAVA1990

Seems kind of crazy that someone should get a pension at only 41 years old (unless it's because they're incapacitated and can no longer push a pen or punch a keyboard). Typical government largesse. You'd never see that in the private sector. I think I'm a liberal on the federal level and a tea partier on the local level as it seems to me local public employees get away with way too much, particularly cops and prison guards. I guess that's why so many state and local governments are in such a fiscal mess.

Cops, prison guards, and military are subject to being exposed to a level of danger and deprivation you have to experience to believe. I did 20+ years in the military and my brother did 20+ years as a police officer. We swap stories about our craziest experiences. I don't know who has the crazier ones, or the worse injuries/surgeries/rehabs *directly traceable to job requirements*.

If an average private sector job comes with a non-negligible chance of being shot at, crashing in a moving vehicle as a condition of employment, blown up, or serious injury due to required physical exertions (taking down a suspect, training exercises) over the course of a career, I'd accept your argument. I don't think most do, and it's not really fair to compare the average private sector job to being a sworn police force member.

Additionally, "pension" here means some measure of previous income. At 41-it is almost never 100%. Without what seems, to you, a fat pension, you'd never get the kind of person you want to be a cop-qualified physically, mentally, and emotionally-to take the job. Same way you'd never get guys to stay in the military to be mid-level and senior leadership.

[Bob from down south]

Originally Posted by GeorgiaTransplant

Cops, prison guards, and military are subject to being exposed to a level of danger and deprivation you have to experience to believe. I did 20+ years in the military and my brother did 20+ years as a police officer. We swap stories about our craziest experiences. I don't know who has the crazier ones, or the worse injuries/surgeries/rehabs *directly traceable to job requirements*.

If an average private sector job comes with a non-negligible chance of being shot at, crashing in a moving vehicle as a condition of employment, blown up, or serious injury due to required physical exertions (taking down a suspect, training exercises) over the course of a career, I'd accept your argument. I don't think most do, and it's not really fair to compare the average private sector job to being a sworn police force member.

Additionally, "pension" here means some measure of previous income. At 41-it is almost never 100%. Without what seems, to you, a fat pension, you'd never get the kind of person you want to be a cop-qualified physically, mentally, and emotionally-to take the job. Same way you'd never get guys to stay in the military to be mid-level and senior leadership.

In general, I'd agree. After surviving a successful career, an Army Sgt First Class retiring with 26 years gets a pension of around $37K a year, and a Lieutenant Colonel's pension at 20 years is about $48K. I think most police and fire pensions are at similar levels.

But when you read about a Vallejo, CA fire captain retiring at 22 years with a $205K pension, or a Chicago-area school administrator with 17 years retiring with a $240K pension, it's clear that all public pension plans are not the same. Some are insane and unsustainable (and there's usually a union involved in getting it to be that way), and both California and Illinois are in the early chapters of a fiscal fairy tale where obligations to bloated public pensions stand to strip the state coffers bare before any actual work gets done. Those little pigs, living in their houses of straw, aren't going to like it when the big bad budget wolf starts huffing and puffing...

Originally Posted by Jimrob1

Colorado gives a hefty break on retirement income

I don't know about "hefty." The tax break amounts to around $75/month...but for many retirees, every little bit does help.

[Jimrob1]

Originally Posted by Bob from down south

In general, I'd agree. After surviving a successful career, an Army Sgt First Class retiring with 26 years gets a pension of around $37K a year, and a Lieutenant Colonel's pension at 20 years is about $48K. I think most police and fire pensions are at similar levels.

But when you read about a Vallejo, CA fire captain retiring at 22 years with a $205K pension, or a Chicago-area school administrator with 17 years retiring with a $240K pension, it's clear that all public pension plans are not the same. Some are insane and unsustainable (and there's usually a union involved in getting it to be that way), and both California and Illinois are in the early chapters of a fiscal fairy tale where obligations to bloated public pensions stand to strip the state coffers bare before any actual work gets done. Those little pigs, living in their houses of straw, aren't going to like it when the big bad budget wolf starts huffing and puffing...



I don't know about "hefty." The tax break amounts to around $75/month...but for many retirees, every little bit does help.

Just so I understand this isn't the first $20,000 of retirement income in Colorado, tax deductible at age 55 and $24,000 at age 64 or 65.

[Bob from down south]

Originally Posted by Jimrob1

Just so I understand this isn't the first $20,000 of retirement income in Colorado, tax deductible at age 55 and $24,000 at age 64 or 65.

Not sure about your question...the idea is that (at age 55) you take an additional $20K off your federal taxable income, and pay CO income tax on that reduced amount. IIRC, CO income tax is a flat 4.65% of your federal taxable income, so it saves you around $900/yr at age 55, and ~$1100/yr after age 65.

[Ct_bow]

Originally Posted by GeorgiaTransplant

Cops, prison guards, and military are subject to being exposed to a level of danger and deprivation you have to experience to believe. I did 20+ years in the military and my brother did 20+ years as a police officer. We swap stories about our craziest experiences. I don't know who has the crazier ones, or the worse injuries/surgeries/rehabs *directly traceable to job requirements*.

If an average private sector job comes with a non-negligible chance of being shot at, crashing in a moving vehicle as a condition of employment, blown up, or serious injury due to required physical exertions (taking down a suspect, training exercises) over the course of a career, I'd accept your argument. I don't think most do, and it's not really fair to compare the average private sector job to being a sworn police force member.

Additionally, "pension" here means some measure of previous income. At 41-it is almost never 100%. Without what seems, to you, a fat pension, you'd never get the kind of person you want to be a cop-qualified physically, mentally, and emotionally-to take the job. Same way you'd never get guys to stay in the military to be mid-level and senior leadership.

Furthermore, it's common knowledge most cops are under paid considering the job requirements. You have to work a lot of overtime to make a decent paycheck. So cops give up making a good salary over the course of their careers for a good pension upon retirement.

Retire at 41? Pensions are different across the country but I'll bet he probably did his 20 years and got 50% of his base pay at retirement. for instance if he was making $50k a year, his pension is $25k.