Have a Tax Question? Ask a Tax Expert
The state is not charging you for anything. An investment or cost of annuity is a good thing for you, because it means that part of each of your pension checks is tax free. When you "recover" your cost using the simplified method (which is required) a portion of each check is tax free until the cost is reached. For example, lets round your cost to $15,000. A table is used to determine the number of years that you can recover the cost. Lets use 20 years as an example---this is 240 months. So 15,000 divided by 240 = $62.50 of your gross pension amount of 3464 that is tax free. The remaining $3401.50 is taxable.
Now, the above is an example of how you will determine at tax time how much of your pension is subject to taxation. (See page 12-13 in this publication for the IRS discussion of cost recovery under the Simplified method): http://www.irs.gov/pub/irs-pdf/p575.pdf
Here is the STRS information on cost recovery: https://www.strsoh.org/retirees/1b.html
The $33 deduction is a mystery, because we don't know what the deduction is...Can you look at the stub that accompanies your check or direct deposit info and tell me exactly what deductions are there, what the explanation is (for example, FEDWITH, or INS, etc.) and the amount? Then I could help you determine exactly what the extra $33 is for.
It is possible that the $33 is additional federal tax being withheld. I suspect that what may have happened is that they determined whatever taxable amount they were withholding tax on previously was incorrect, and they refigured it and withheld more federal tax. If it is more tax than you owe on the income, you will get it back in a refund. If you do not want them to withhold Fed. tax, you can opt out of it, but you will be responsible for your tax liability when you file a tax return, or you could pay quarterly estimated payments.
Please let me know how else I can assist you with this, and if you need more clarification or information.