Maryland Retirement System | Pension Info, Taxes, Financial Health

The state retirement system of Maryland consists of seven different retirement plans to cover the multiple types of state employees. Before we dive deep into the intricacies of each system, take the time to brush up on pensions. If you would value some extra help navigating the complex pension system, SmartAsset’s financial advisor matching tool can help pair you with advisors who serve your area.

Types of Retirement Systems in Maryland

Maryland has a solid variety of retirement systems for its nearly 200,000 public employees, with seven distinct offerings across all different public employments. The benefits and retirement requirements that accompany these plans depend on what the position entails. According to its State of Maryland Retirement and Pension System Handbook, whether a Maryland resident works as a state and municipal employee, an educator, law enforcement personnel, a judge, a legislator, or another public employee, the state promises security in retirement. Here are the primary plans.

Maryland Retirement Systems

Plan Title	Eligible Employees
Employees’ and Teachers’ Retirement System	State and participating municipal employees and personnel of Maryland public schools, public libraries and affiliated State universities and colleges who were enrolled prior to January 1, 1980 and who have elected to remain a member of the Retirement System.
State Police Retirement System	Permanent, full-time sworn officers and cadets of the Maryland State Police.
Law Enforcement Officers’ Pension System	Employees of the Department of Natural Resources commissioned by the Secretary of Natural Resources as Natural Resources police officers or law enforcement officers, other than Natural Resources police officers. Law enforcement officers employed by the Maryland Investigative Services Unit. Members of the Maryland Transportation Authority Police Force who have the powers granted to a police officer under § 4-208 of the Transportation Article. Deputy sheriffs employed by the Baltimore City Sheriff’s Department. Members of the University of Maryland Police Force and Morgan State University Police Force who have the powers granted to a police officer. Law enforcement officers or firefighters employed by a participating governmental unit that on or after July 1, 1999, elected to participate in LEOPS. The State Fire Marshal and Deputy State Fire Marshals. Members of the Baltimore Washington International (BWI) Airport Fire and Rescue Department. Members of the Department of General Services Police Force who have the powers granted to a police officer. Employees of the Department of Health and Mental Hygiene commissioned by the Secretary of Health and Mental Hygiene as Health and Mental Hygiene police officers. Employees of the Motor Vehicle Administration commissioned by the Secretary of the Department of Transportation as Motor Vehicle Administration police officers. Employees of the Department of Labor, Licensing and Regulation commissioned by the Secretary of Labor, Licensing and Regulation as Labor, Licensing and Regulation police officers. Firefighters or law enforcement officers for the Martin State Airport employed by the Military Department. Police officers employed by the Division of Rehabilitation Services in the Department of Education, certified in accordance with the Maryland Police and Corrections Training Commission. Firefighters or paramedics employed by the Salisbury Fire Department. Members of the Maryland Transit Administration Police Force who have the powers granted to a police officer. Aviators employed by the Department of State Police to operate an aircraft for the State Emergency Medical System. An individual who is elected or appointed as the Baltimore City Sheriff and who does not elect to join the Employees’ Pension System within six months of taking office. Members of the Department of Public Safety and Correctional Services Internal Investigative Unit who have the powers granted to a police officer. Police officers employed by the Baltimore City Community College who have the powers granted to a police officer.
Correctional Officers’ Retirement System	Security attendants at Clifton T. Perkins Hospital Center. Correctional dietary, maintenance, laundry or supply officers. Maryland Correctional Enterprises officer, officer trainee, plant supervisor, plant manager or regional manager. Detention center officers employed by a participating governmental unit that elects on or after July 1, 2006 to participate in the Correctional Officers’ Retirement System.
Judges’ Retirement System	A member of the State Workers’ Compensation Commission. A master in chancery or master in juvenile causes who was appointed by the circuit court of a county on or before June 30, 1989 and serves full-time as a master.
Legislative Plan	All members of the Maryland General Assembly.
Optional Retirement Plan	All are eligible, but benefits may vary based on a set of qualifications.

The retirement plans the Maryland retirement system offers are dedicated to public employees who are divided into two groups. First, there’s the the State Retirement Plan, under which the first six systems fall. Second, there’s the Optional Retirement Plan, which is separate and follows another set of rules. We break them down further below:

Overview of Maryland’s Main Retirement Systems

Employees’ and Teachers’ Retirement System: This is the largest of the State Retirement Plan System (SRPS) sub-plans. As such, it applies to most general employees. In particular, it targets teachers at public schools and universities in the state of Maryland. The ETRS specifically covers state and participating municipal employees and personnel of Maryland public schools, public libraries and affiliated state universities and colleges who enrolled prior to January 1, 1980. In addition they must have elected to remain a member of the Maryland retirement system.

State Police Retirement System: The SPRS branch of SRPS is for the permanent, full-time sworn officers and cadets of the Maryland State Police. The State Police Retirement System began in 1949. And since then, it has been a reliable source of retirement safety for its cadets and uniformed cops. This plan includes extensive benefit programs should its workers die on the job or encounter injuries.

Law Enforcement Officers’ Pension System: The LEOPS program casts the widest net of any of the employee plans. It covers dozens of employee types. That demonstrates its commitment to protecting the hardworking people with general title “officer” in Maryland. Its handbook detailing how to sign up, and how to reap the most benefits, spans nearly 60 pages.

Correctional Officers’ Retirement System: Correctional Officers make up a large cut of the public employee system in Maryland, due to a large correctional facility within state lines. As a result, the correctional Officers’ Retirement System is an expansive asset in the State Retirement System and plan. People who work in these correctional facilities, in a wide variety of roles must enroll in this system.

Judges’ Retirement System: This system is for members of the state and federal court for Maryland. Working as a judge or chancellor in this respect is often a lengthy career term. So the benefits for this job are quite competitive. In fact, they are among the best in the state.

Legislative Plan: Plain and simple, this plan is for members of the state legislature and offers a handful of benefits in exchange for decades of public service. The longer you’ve been an employee, the greater you can expect this benefit to be.

Retirement Taxes in Maryland

Federal

On a federal level, you do not pay taxes on your pension plan contributions don’t. That means it’s a tax-deferred account. But there’s a catch: you pay taxes on any payments you take directly from your pension once you retire. On the bright side, you will have the chance to decide whether you would prefer to have these funds withheld from each pension check. As an alternative, you can make estimated tax payments.

Many factors will influence exactly how much money in taxes Uncle Sam will take from your account. Of course, they’re hard to predict. But luckily the government routinely does most of those calculations for you and will give you a refund (or charge the dividends) at year’s end. Retirement plans, like many of Mississippi’s, include a , which goes from your pension plan to a different, tax-deferred retirement account. Finally, if you instead have a Roth IRA, you’ll instead pay taxes up-front. But many of your distributions will be tax-free.
State

As detailed in our thorough Maryland Retirement Tax Friendliness Guide, the state of Maryland is moderately tax-friendly toward retirees. It does not tax Social Security or retirement account withdrawals. Maryland taxes wages at the normal rates. The marginal state tax rate is 4.75%. Finally, public pension income is partially taxed, and private pension income is fully taxed.

Current Financial Health of the Maryland Retirement System

The current state of the Maryland retirement system, drawing from its 2022 report, has lost some money, but still came in below their projected losses. This should come as no surprise given the volatile state of the stock market over the last few years.

The Maryland retirement system does boast a pronounced uptick in value and income for such public works jobs. Most significantly, the number of enrolled workers in the program is well into the hundreds of thousands.

Tips for a Successful Retirement

Devising a list of financial goals you’d like to meet before you reach retirement age is the best way to ensure that you’re not over-saving. This will make it easier to decide where you want to end up financially, which can make retirement more attainable.
Even with all the benefits of a pension, retirement can nonetheless prove difficult to prepare for. Help from a financial advisor can help you get your ducks in a row. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.