Contributions made by Hennepin County and all investment earnings associated with those contributions are subject to federal and state income taxes the year in which they are received by you through a withdrawal.
Contributions you made to the plan are taxed when deducted from your paycheck; therefore, are not taxed when you take a withdrawal. However, investment earnings associated with your contributions are subject to federal and state income taxes the year in which they are received by you through a withdrawal.
What you should know
Payments are issued through MSRS and are reported on a Form W-2. You will receive this tax document no later than January 31 the calendar year following the year in which you took a withdrawal from your account. (Note: Until July 1, 2015, withdrawals were reported on a 1099-R.)
Federal and state taxes withheld from a withdrawal are based on instructions you provided on a Form W-4P and the current tax rate.
There are no FICA taxes due on these distributions.