Short answer: your ATRS pension is federally taxable, because your contributions went in before tax. Arkansas taxes it too, but retirees 59½ or older can exclude up to $6,000 of pension income a year. The ATRS lump-sum death benefit is tax-free. Member Handbook p. 10; p. 14; 24 CAR § 10-403(b)(2); Arkansas DFA Subject 206
Federal tax
Your 7% contributions are taken out pre-tax. ATRS sends an IRS Form 1099-R each year (also in the Member Portal). Member Handbook p. 10; p. 14; 24 CAR § 10-403(b)(2); Member Handbook p. 27
One month before retirement, ATRS's checklist says to confirm your tax exemptions (withholding) are set correctly. Member Handbook p. 50, 1 Month Prior to Retirement
Arkansas state tax
Arkansas: a retiree receiving benefits from an employer-sponsored pension may exclude $6,000 of the taxable amount (not more than the pension). A spouse with his or her own employer pension gets a separate $6,000. Not available under 59 1/2, with the 'low income' table, with the '65 Special' box, or together with the military pension exemption. Arkansas DFA Subject 206
Arkansas DFA: if you get an employer pension, take the $6,000 exclusion off the taxable amount shown on your 1099-R. If your pension is under $6,000, the exclusion is limited to the pension. You can't use it if you're under 59 1/2 or if you check the "65 Special" box. Arkansas DFA Subject 206
Members of the McFadden v. Weiss or Maples v. Weiss lawsuits may have a different cost-recovery amount for Arkansas tax; with zero basis after the lawsuit, the Arkansas taxable amount is the gross distribution, whatever the 1099-R says. Arkansas DFA Subject 206
Lump sums
The ATRS lump-sum death benefit is tax-exempt (see survivor benefits). 24 CAR § 10-816(c) (Acts 2009, No. 1323: no federal or state income tax withheld; not eligible for rollover); General Info pamphlet p. 2 ('non-taxable payment up to $10,000')
A T-DROP lump sum or CASH payment not rolled over may have significant tax consequences. Member Handbook pp. 16, 19
Retirees with a Cash Balance Account must take required minimum distributions from age 73, unless they are rehired retirees or have kept working for a covered employer without a break in service, with the employer reporting them to ATRS and paying employer contributions. RMDs follow federal tax law. Member Handbook p. 20 Refund taxes are covered under leaving teaching.
This page is general information from ATRS and Arkansas DFA, not tax advice. Ask a tax professional about your own situation.
From the sources
- Your 7% contributions are taken out pre-tax, and ATRS sends a 1099-R each year for your benefits.Member Handbook pp. 10, 27
- Arkansas lets retirees 59 1/2 or older exclude up to $6,000 of employer pension income from state income tax ($6,000 each for spouses who both have pensions). It isn't available with the low-income table.Arkansas DFA Subject 206
- The ATRS lump-sum death benefit is tax-exempt. T-DROP or CASH lump sums that aren't rolled over can have significant tax consequences.24 CAR § 10-816(c); Member Handbook pp. 16, 19
Questions
Does Arkansas tax my ATRS pension?
Partly. The Arkansas Department of Finance and Administration lets retirees exclude up to $6,000 of employer pension income a year from state income tax. The rest is taxable.
Is the ATRS lump-sum death benefit taxed?
No. ATRS's rules say no federal or state income tax is withheld from it.
Will ATRS send me a tax form?
Yes, an IRS Form 1099-R each year. It's also in the Member Portal.
Can I use the Arkansas exclusion before 59½?
No. Arkansas DFA says the exclusion isn't available under 59½, with the low-income table, with the 65 Special box, or together with the military pension exemption.
Does my spouse get a separate exclusion?
Yes, if your spouse also has an employer pension: a separate $6,000.
Source: ATRS Member Handbook, 2026-2027 school year (current as of July 2026), pp. 1, 10, 14, 16, 19, 20, 27, 50. Also: General Info pamphlet p. 2; Arkansas DFA Subject 206; ATRS rules, 24 CAR §§ 10-403, 10-816. Last reviewed .