Thinking out loud and looking for opinions!
New client received an annuity payment of almost $90,000 from the state for a decade of service. The agency he worked for did not put him in the retirement plan so he brought this to their attention. He received a lump sum payment of $73,500 w/ this breakdown:
Gross: $ 88,000
State w/held: 2,000
Federal W/held: 12,500
Footnote:Includes 21,000 in interest.
If properly enrolled in the plan he would have had to pay $3,500 over the years, so he did have to cut a check for this amount to receive the $73,500.
His 1099R reports only his normal distribution of $25,000 as Gross and Taxable amount, with the entire amount of Federal W/holding - $18,000 and State W/holding - $4,500.
Why wouldn't the entire amount be included on the 1099R, or even the amount w/out the interest?
I want to say this entire amount is taxable unless an exception exists, which I can't see to find. He is not eligible for Lump-Sum averaging. Any other options?
The money was received in June of 2006 when I think he should have checked out his options to roll this money into another retirement plan but don't see this as an option now.
Any thoughts would be appreciated.
New client received an annuity payment of almost $90,000 from the state for a decade of service. The agency he worked for did not put him in the retirement plan so he brought this to their attention. He received a lump sum payment of $73,500 w/ this breakdown:
Gross: $ 88,000
State w/held: 2,000
Federal W/held: 12,500
Footnote:Includes 21,000 in interest.
If properly enrolled in the plan he would have had to pay $3,500 over the years, so he did have to cut a check for this amount to receive the $73,500.
His 1099R reports only his normal distribution of $25,000 as Gross and Taxable amount, with the entire amount of Federal W/holding - $18,000 and State W/holding - $4,500.
Why wouldn't the entire amount be included on the 1099R, or even the amount w/out the interest?
I want to say this entire amount is taxable unless an exception exists, which I can't see to find. He is not eligible for Lump-Sum averaging. Any other options?
The money was received in June of 2006 when I think he should have checked out his options to roll this money into another retirement plan but don't see this as an option now.
Any thoughts would be appreciated.