Announcements
VRS Reports 0.6% Return for Fiscal Year 2022
The Virginia Retirement System achieved a 0.6% return, net of fees, on its investment portfolio for fiscal year 2022. The portfolio ended the year with approximately $101.2 billion.
“We registered a positive return by following VRS’ long-term strategy of diversification while taking advantage of strong private markets,” Chief Investment Officer Ronald D. Schmitz said. “Although the return was muted compared to last year’s banner 27.5%, the VRS total fund outperformed passively managed stock and bond indices by over 10%. In addition, we exceeded the assumed rate of return for the three-, five- and 10-year periods.”
“VRS remains in a solid position to support our current and future retirees while maintaining stable contribution rates for our employers,” said VRS Board Chair A. Scott Andrews. “Our investment professionals are bound by a risk-controlled approach, typically contributing about 0.5% of average added value annually over the long term. In a year scarred by inflation, war, supply chain issues and other disruptions, the VRS investment staff achieved a remarkable 6% of added value above the benchmark, which translates to hundreds of millions toward the bottom line of the VRS trust fund.”
The portfolio included approximately $29.9 billion in public equity, $12.9 billion in fixed income, $14.5 billion in credit strategies, $15.1 billion in real assets, $19.0 billion in private equity, $2.6 billion in private investment partnerships and $3.6 billion in public strategies portfolio, as of June 30, 2022.
Read more about VRS’ investment strategy at varetire.org/investments.
Updates to Tax-withholding Formula Results in Form Changes
The IRS has changed the formula to calculate federal tax withholding from your retirement benefit. No action is required unless you need to change your tax withholdings in the future.
The next time you make a change to your federal taxes, the new tax form asks you to specify annual tax withholdings in dollar amounts instead of choosing the number of withholding allowances. You’ll also report total income, in addition to your VRS pension. The steps for state tax withholding are unchanged.
The easiest way to update your tax withholding is to log in to your myVRS account. A form is also available at varetire.org/forms.
Tax Forms Coming in January
If you received a monthly retirement benefit from VRS in 2022, expect a Form 1099-R from VRS in late January. The Form 1099-R shows your benefit payments, taxes withheld and other information for the previous calendar year. Use the form to complete your 2022 federal and state income tax returns.
Reminder: Imputed Income Subject to Taxes
If you were covered under the VRS Group Life Insurance Program as a member, this benefit follows you into retirement. If the value of your group life insurance coverage exceeds $50,000, the value of the excess amount is considered imputed income and is subject to income taxes and FICA (Social Security and Medicare) taxes.
If you have VRS Group Life Insurance coverage, VRS automatically withholds FICA taxes and sends you a Form W-2 each year showing the amount withheld and the additional taxable income.
Use the Form W-2 to file federal and, if applicable, state income taxes.
As your life insurance coverage reduces, the amount of imputed income also reduces. If your coverage reduces to less than $50,000, these taxes will no longer be withheld, and you will no longer receive a W-2 from VRS. To learn more about VRS Group Life Insurance and how it reduces over time, visit varetire.org/retirees.
General Assembly Appoints Henrico Teacher to Board
The Joint Rules Subcommittee of the Virginia General Assembly recently appointed Henrico County Teacher Lindsey K. Pantele to the VRS Board of Trustees. Pantele was named Teacher of the Year for Henrico County in 2020. She received her National Board Certification from the National Board for Professional Teaching Standards in 2019, which is the highest certification a teacher can obtain. Pantele teaches English and Foundations of Teaching at Glen Allen High School.
Use myVRS to Apply for the Health Insurance Credit and Update Health Insurance Premium Information
If you retired with at least 15 years of service from a participating employer, the health insurance credit is a tax-free reimbursement (as directed by the IRS) to assist with the cost of your health insurance premiums. The credit is a dollar amount set by the General Assembly for each year of service and is added to your monthly retirement benefit. The credit ends upon your death and cannot exceed the amount of your individual health insurance premium.
Applying for the Health Insurance Credit
If VRS is already deducting your health insurance premium from your retirement benefit, you do not need to apply for the health insurance credit. This deduction appears on your Benefit Payment Summary page in myVRS.
If VRS is not deducting your health insurance premium or if you have eligible health insurance coverage in addition to coverage that VRS is already deducting, log in to myVRS at myVRS.varetire.org to claim your credit and ensure you receive the maximum amount.
Keeping your information current ensures you receive the proper credit amount and are not at risk for receiving an overpayment, which would require you to reimburse VRS.
Qualifying health plans:
- Individual health plans.
- Coverage as a dependent on a spouse’s plan.
- Employer-sponsored health plans, including the State Retiree Health Benefits Program.
- Medicare Part B.
- Dental and vision plans.
- Prescription drug plans, including Medicare Part D.
Report Health Insurance Coverage Changes
Report the following coverage changes to VRS by logging in to myVRS:
- Change in your health insurance plan.
- Increase or decrease in your health insurance premium.
- Cancellation of your health insurance.
Alternatively, you may complete and send the Request for Health Insurance Credit (VRS-45) to VRS. The VRS-45 is available at varetire.org/forms or by calling 888-827-3847.
If your health insurance premiums are deducted from your retirement benefit, you do not need to notify VRS of a premium increase unless you are not already claiming your maximum credit amount.
Retired Public Safety Officers May be Eligible for HELPS
The federal Healthcare Enhancement for Local Public Safety (HELPS) Retirees Act allows eligible retired public safety officers to exclude a certain amount per year from retirement income used for qualified health insurance premiums or long- term care insurance premiums, if the premiums are deducted directly from your retirement benefit.
Premiums covering yourself, your spouse and dependent children may be eligible for this tax exclusion. You must claim the insurance premium exclusion on your tax return. The Form 1099-R that you receive reflects total taxable income without any adjustment for this benefit. For more information, contact a tax advisor or the IRS at 800-829-1040, or visit irs.gov.
