Transcript Retirement powerpoint - Earn It! Keep It! Save It!

IRA and PENSION INCOME
Pub 4491
Pub 4012
Form 1040
Pub 17
Lesson 11
Tab 2
Lines 15-16
Chapters 10, 17
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IRA DISTRIBUTIONS
Pub 17 Ch 17
• Reported on Form 1099-R
• SIMPLE IRAs and SEPsp122: out-of-scope
• Traditional IRAsp123
– See Intro and Who
– Must take required minimum distribution - see
Excess Accumulationsp130
• Roth IRAsp131
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PENSIONS & ANNUITIES
Tab 2
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Box 7 codes (i.e. 7, 3, 4, 1, G)
Early Distributions (Code 1)
Disability Pensions (Code 3) – line 7 1040?
Exclusion Worksheet (i.e. rollover, PSO
health insur, simplified method)
“Simplified Method” – Box 9b (ee contrib)
1099-R
Most common
RRB-1099R (green) Railroad Benefits
CSA-1099R
Civil Service
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Disability Retirements
• Disability payments are taxed as wages
until the taxpayer reaches the minimum
retirement age (age is set by the
employer) - report on line 7 Form 1040
• After the taxpayer reaches the minimum
retirement age, disability payments are
treated as pension income to determine
taxability – report on line 16 Form 1040
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Taxable Distributions
• Payer will compute the taxable portion of the
distribution and report it (box 2a Form 1099R)
• Retirement plans are funded by either
before-tax or after-tax contributions
– Before-tax - entire distribution will be fully
taxable
– After-tax – distributions partially taxable (box 9b
Form 1099-R)
• Two methods used to figure taxable portion
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the General Rule and the Simplified Method
Simplified Method
• Volunteer Resource Guide (Tab 2), 1099-R
Exclusion Worksheet - calculating the
taxable portion using the Simplified Method
• To calculate you will need:
• Cost in the plan (box 9b Form 1099-R)
• Age - taxpayer’s age on the date the annuity
began (and spouse’s age if joint/survivor annuity is
selected);
note if the annuity starting date is
before or after the
taxpayer’s birthday for that
year
• Total of tax-free amounts from previous years
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- available from the
taxpayer’s prior year worksheet 6
Exclusion Worksheet
(page 2-18 Pub 4012)
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RRB-1099R (Green)
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Pension Income
Questions?
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