Postal Worker Pension?

[zeros]

Postal worker retired and received one month's pension in 2009. On the 1099R it states a figure in gross distribution. The taxable amount is "unknown." He says he has contributed $67K over his lifetime. Can we assume that the $67K was all pre-taxed and all distributions will be taxable? Anyone had one like this?

[JohnH]

Doesn't the 1099-R provide the rest of the info you need regarding the cost in the plan in box 9b?

[zeros]

No

Would the life expectancy rule come into play? 3 year rule?

[S T]

Usually Maybe Sometimes

The taxpayer receives some "printout" from Benefits Dept that will give the figures on the taxpayers "Investment in the Contract" or Employee's Contributions. , then you can the exclusion amount. That amount might be a figure on the 1099R form as John H posted.

Pub 575 around page 11 - should provide you with the information.

Sandy

[zeros]

His Contribution

Client has the amount of his contribution, as previously been stated. What now?

[Black Bart]

I

Client has the amount of his contribution, as previously been stated. What now?

don't think there's any easy way out of your dilemma (unless you can run him off), but try pulling up Publication 721 at Google or IRS. That's the "Tax Guide to U.S. Civil Service Retirement" and I think it lays out the "What now?" formula.

I haven't done one for decades, so have no practical advice about figuring it. Years ago many private sector 1099-Rs listed nothing in that taxable box -- now, almost all do except the one outfit (USPS) that spares no expense on their employees, but leaves this nut for preparers to crack.

I do remember it was a PIA and swore I'd never do another. Too, if you get your percentage wrong the first year, you're accumulating liability (possibly for both of you) in every succeeding year. I know accepting such challenges expands your tax knowledge, enriches your professional life, blah-blah-blah, but cheap toilet paper also builds character and I'm avoiding it anyway.

[dyne]

The 3 year rule was repealed as of July 7, 1986. Now such taxpayers normally would
use the Simplified Method to calculate the taxable portion of their pension. Drake Tax
Software calculates this for us. Once calculated, the SAME taxable portion is used
thereafter.

[Black Bart]

Yeah,

The 3 year rule was repealed as of July 7, 1986. Now such taxpayers normally would
use the Simplified Method to calculate the taxable portion of their pension. Drake Tax
Software calculates this for us. Once calculated, the SAME taxable portion is used
thereafter.

it was simple enough when they had the three-year rule, but when they ended that (didn't want it people writing it off so quick) and stretched it out over the years is when it started getting sticky. At that time I had no software and at this time maybe zeros' software doesn't figure it.

[Burke]

Any softare worth its salt should do this calculation as long as you have all the information:

1. Amt of contribution
2. Date the annuity started
3. Age
4. How many months received in taxable year.
5. Accumulated non-taxable amount
6. Remaining amt to be recaptured.

If not, it can be done manually the first year. Then you have it forever except for the last two items which adjust each year. The factors don't change. Pub 575 has the worksheet.

[Black Bart]

And there lies the rub...

... it can be done manually...Then you have it forever...

I don't want to be responsible to or tied up with any retired government worker (there's frequently a substantial amount of abrasive aggressiveness built-in) from now on. But...everybody to his/her own taste.