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Civil service pension 1009-r recovery of cost

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    Civil service pension 1009-r recovery of cost

    New customer, a form social security administration worker retired in 2002 at age 57 & gets a code 7-nondisability office of personnel management 1099-R form. This 2017 form shows :
    $ 47,424 box #1 gross paid
    $ 45,356 box #2 taxable
    $ 7,847 box #5 employee contributions or insurance premiums
    $ 62,014 box #9B total employee contributions

    She and her husband were both age 57 when she began receiving her pension.

    My question is whether the recovery of her cost in this pension is already baked into the box #2 ( taxable) amount or should she be recovering this cost on her 1040 using one of the recovery methods ?

    #2
    There should be supplemental information that came with the 1099-R that explains the information shown.
    It greatly depends on what year she started taking the pension.

    I have a similar situation with a retired postal employee where I need to calculate the taxable amount via the Simplified Method. (I have my software do the calculation, as I've put in the necessary data to automatically calculate it each year) The 1099-R checks the box that says "Taxable Amount Not Determined". Your situation seems to be different since the taxable amount IS shown.

    And also find out at what temperature and for how long it was "baked".
    Uncle Sam, CPA, EA. ARA, NTPI Fellow

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      #3
      Box 5 is going to be the health insurance premiums. Box 9B is the total employee contributions to the pension. Use your software to calculate the Simplified Pension Worksheet for recovery of contributions using Age 57 as the starting date and see if it calculates out to $ 2,088 this year, which is the difference on the 1099R between gross and taxable. The total remaining recovery amount should also be on the worksheet. My software carries over this and adjusts every year.

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        #4
        Originally posted by RWG1950 View Post
        New customer, a form social security administration worker retired in 2002 at age 57 & gets a code 7-nondisability office of personnel management 1099-R form. This 2017 form shows :
        $ 47,424 box #1 gross paid
        $ 45,356 box #2 taxable
        $ 7,847 box #5 employee contributions or insurance premiums
        $ 62,014 box #9B total employee contributions

        She and her husband were both age 57 when she began receiving her pension.

        My question is whether the recovery of her cost in this pension is already baked into the box #2 ( taxable) amount or should she be recovering this cost on her 1040 using one of the recovery methods ?
        It appears that this calculation corresponds to the simplified method using a divisor of 360. That divisor would be used for age 57 with a survivor benefit for the spouse. In any case the 360 divisor gives you the value in box 2 - I think the recovery method is already being used to give you that number.

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          #5
          Other question. What happens to unrecovered cost if TP dies in 2018 where the 2% is gone?

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            #6
            He means the new tax law which eliminates the 2% haircut for misc deductions.

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