Adjustments and overpayments FAQ
If any of the components that make up your CalSTRS benefit calculation change, the change can have an impact on your CalSTRS benefit. Examples of changes that could occur are:
- We receive new or additional information from an employer or employers, such as a school district, community college district or county office of education.
- You change a benefit component, such as your retirement date or option beneficiary choices.
- We review and update internal data.
If a change to your benefit is needed, we send you a letter alerting you to the benefit adjustment and explaining the impact that adjustment will have on the amount of your future CalSTRS benefit payments.
If the information we use to calculate your benefit changes, we recalculate your benefit based on the new information to ensure accuracy, which could result in a lower monthly benefit. If your benefit is reduced, we recalculate your benefit using the new correct benefit amount back to the date you first started receiving the benefit, also known as the benefit effective date. If this happens, it is possible we may have overpaid you. This is known as an overpayment.
If you receive a letter about an adjustment to your CalSTRS benefit resulting in an overpayment dated prior to January 1, 2023, we will collect the overpaid amount from your benefit until you have repaid the full amount of the overpayment.
Under the provisions of California Assembly Bill 1667, if you receive a letter about a benefit adjustment dated on or after January 1, 2023, and the adjustment that caused the overpayment is due to information submitted by your employer or because of CalSTRS error, your benefit will still adjust but you will not be responsible for paying back the amount you were overpaid. If the adjustment occurred because of employer reporting, CalSTRS will bill employers for the overpayment. If the adjustment occurred because of CalSTRS error, CalSTRS will bill the state and employers for the overpayment.
If the adjustment that caused the overpayment is due to information submitted by you, CalSTRS will collect the overpaid amount from your CalSTRS benefit. We will also collect an overpayment from your benefit in cases of fraud or intentional misrepresentation by you.
You are responsible for paying back an overpayment that resulted from a benefit change due to information you provided. This could be due to, but not limited to, retirement date changes, beneficiary changes and untimely notifications of death.
If you are responsible for paying back the overpayment, you will receive a 15% reduction in your monthly benefit until the overpayment is paid in full.
In the case of fraud or intentional misrepresentation by you, we will hold your monthly benefit until the overpayment is paid in full.
In most circumstances, overpaid benefits are taxable in the same manner as your monthly benefit. We withhold taxes at the time your benefit is distributed unless you elected not to withhold taxes. If your taxable benefit was overpaid, and you are not required to pay it back, we will send you additional tax information at the end of the year. A different tax treatment may apply for overpayments on rollover eligible distributions.
Note: We do not provide tax advice. If you need assistance with computing your taxes, or further tax law clarification, we suggest you contact the Internal Revenue Service, the California State Franchise Tax Board, your attorney or your tax consultant.
If you receive an adjustment letter indicating your monthly benefit increased, we will reimburse you the amount you are owed. If there is an existing overpayment, we will apply the underpayment to the amount due. If a balance remains, we will pay you the balance.