New client with 1099R from IRA Code 1 Taxable distribution for which she received the check. She had time in the military and went to work for Vet Admin. She wrote a check to Vet Admin for the exact amount of the IRA distribution (within 60 days of receipt) to "buy her military time into the Federal Retirement System". I believe this qualifies as a "rollover" under the "60-day rule". Am i correct? AND how do i document this in the return?
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John -
Buying time?
I thought you could combine military and civil service time without 'buying'. I knew a guy who was a colonel and about ready to retire. His pay as a colonel was more than his pay in civil service, so he stayed on active duty until he was ready to retire, then took civil service retirement.
Things may have changed, since World War I. I don't think buying into a retirement plan is the same as rolling over an IRA--but maybe someone can give you a more definite answer. -
It's important to know
Just what is the character of employee contributions into the system?
Under CSRS (civil service retirement system, aka the old way) contributions into CRS
were post tax at the rate of 6%. Accordingly total amount contributed were a cost and
therefore prorated deductible against gross annuity.
Now the government has the FERS program, and I believe it's pre tax contributions.,
which fact would bolster your argument for the rollover.
HOWever; the code sanctions what types of plans are eligible for rollovers, and
which are not.
Read the code.ChEAr$,
Harlan Lunsford, EA n LAComment
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You have to find out
>>buy her military time into the Federal Retirement System<<
Maybe the Veterans Administration has a qualified plan, but I wouldn't bet either way. I just don't know, and neither do you. You have to find out.Comment
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