Retirement Benefits

OPM has issued guidance on changes in withholdings in retiree annuities due to the expiration of the “making work pay” tax credit as of the end of calendar year 2010.

As a result, many retirees are seeing an increase in the amount of federal tax being withheld from their monthly annuity payments.


The tax withholding tables published by the IRS were adjusted to provide for the correct withholding amounts without this credit. There was not enough time to adjust annuity withholdings to make the change effective with the January annuity payments but they do affect the February payments and subsequent payments.

OPM said it has “no control over the tax withholding tables; we used the tables provided by the IRS, which are set in law by the United States Congress.”

Annuitants can instruct OPM to lower their tax withholding, but the annuitants are ultimately responsible to ensure their tax burden is met.

An online calculator at allows annuitants to estimate the amount of federal tax withholding and they can make changes at that site or by calling (888) 767-6738.