Happy belated Valentine's Day! Love isn't the only thing that's in the air these days, it seems... state and federal legislatures are a-buzz with financial regulation activity, and local retirees are fighting for their right to be paid what they're owed 💸 All this and more in this week's issue!

📚 This Week in Retirement

1. With funds stagnant for 7 years, retired teachers in Ohio are fighting for cost-of-living increases in their pensions.​
2. New rules regarded RMDs, which lower required minimum distributions to account for longer lifespans, are going into effect.
3. A bill allowing annuities into retirement accounts automatically through QDIAs was reintroduced into the House earlier this week.

💡 Spotlight on... Pension Taxes

This winter, some Michiganders are battling more than the weather—for state senators looking to repeal Michigan's pension tax, there's a greater storm a-brewin'. This week, we're taking a quick look at the state's retirement tax, and what opposing sides have to say about its affect on retirees.

Michigan's pension tax is broadly unpopular; representatives from both sides of the aisle have supported Governor Gretchen Whitmer's recent call to eliminate it in her State of the State address. The 4.25% pension tax, signed into law by previous governor Rick Snyder in 2011, aimed to make up for the tax revenue lost by corporate tax cuts. But recently, progressive Democrats and anti-taxation Republicans alike have been calling for its removal.

​Repeal of the tax would save half a million households receiving retirement income an average of $1,000 annually by exempting public pensions from taxes and increasing tax deductions for private accounts like IRAs and 401(k)s.

Many retired Michiganders planned their retirement based on pre-2011 tax laws, and their savings have suffered under this tax. “It’s hard to go back and replan your retirement after you've left your employment," commented Senator Tom Barrett, who introduced the bill to repeal the retirement tax. He felt it was unfair "when the rules changed halfway through the game."

How would the state make up those lost tax dollars? According to Whitmer spokesperson Robert Leddy, “Due to smart fiscal management and federal funding, the state has billions of surplus dollars that can be used to provide financial relief.”

However, there's been some pushback. Although this tax repeal seems bipartisan, it's still hotly contested along party lines. Take, for example, this recent statement from Senator Jeff Irwin:

Jeff Irwin @JeffMIrwin When Republicans created the retirement tax, it was to pay for corporate tax cuts. Today, Republicans continue to support these taxes on seniors in order to reduce taxes on the wealthy. Jeff Irwin @JeffMIrwin In the Michigan Senate, we just voted on eliminating the retirement tax. All Democrats voted to eliminate the retirement tax that Republicans created in 2011. All Republicans voted to keep taxing seniors on their pensions. February 15th 2022 724 Retweets 2,080 Likes

Because the retirement tax was implemented to make up for corporate tax cuts, there was a hope that taxes for the latter would increase. But many representatives still won't budge on corporate tax increases, and some economists are unsure that Michigan has the surplus cash to fill in the gaps.

Still, most regard this repeal as a win for everyone. Melissa Seifert, an associate state director for AARP, remains optimistic: “I’m very eager to see if (repealing the retirement tax) not only changes whether retirees stay in Michigan, or if it is going to create more talent development with younger generations that see that they're not going to get a tax on their pension.”

Only time will tell, but one thing's for certain: any move to keep more of our hard-earned retirement money is a step in the right direction!

We here at Better Benefits have been focusing more on retirement content for a hot second now, and we want to know what you think! Take this quick survey to help us help you stay informed and engaged — your input means the world to us!

​