COLA reduction, tax increase


Q: What were you thinking? No COLA for two years, now a tax increase, causing my check to be $38 less. I am barely surviving. Do something. This is no way to repay veterans, or their widows,  for their service.

A: You’ve come to the wrong place to point the finger of blame. The fact that no cost-of-living adjustments are being made on retiree annuities is a product of the same law that routinely gave you COLAs in the past. When the economy tanked, the index on which they are computed fell below zero. Just be thankful that this same law protected you from having your annuity reduced. As for the increase in federal tax deductions from your annuity, the answer is simple. The “Making Work Pay” credit expired Dec. 31. The IRS issued a notice in December saying withholding tables for 2011 would no longer be adjusted for the Making Work Pay tax credit and there is no longer an optional additional withholding adjustment for pensions.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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