office of personnel mgmt

[michaelmars]

got a 1099r from above agency. of course our gov't doesn't comply with their own rules. no box numbers and no instructions on back. i got gross annuity amt of $20251 original contributions of $10,288 taxable annuity of 19,712 and health insurance premiums of 2,072. code 7 What do i enter where? HELP!

[TAXBILLY]

Never saw one without box numbers but if this is a civil service pension you would put the gross on line 1, the taxable on line 2. The health insurance premiums would go on schedule A.

taxbilly

[Lynn EA USTCP in Louisiana]

Are those really "Health" insurance premiums? Or are they your investment in that contract?

Lynn Jacobs, EA

Kenner, LA

[RDennis]

Should be health insurance payments--retired civil service payments can retain their health insurance.

Dennis

[michaelmars]

i am thinking the original contribution box is the investment in the contract but i still don't know how that affects anything. i never had this sort of annuity before.

[RDennis]

Yes, the original contributions box is the investment in the contract. If the person retired under the new system (FERS), the taxable annuity has been computed, using the new rules. If the person retired under the old system (CSRS), you have to compute the taxable annuity, and there will be no amount in the taxable annuity box. Sounds as if the person retired under FERS (which started 1/1/1984).

Dennis

[michaelmars]

SO what they put as the taxable amount is the taxable amount and i can basically not worry about the employees investment? thanks so much!

[MargaretMort]

I pulled out a client's statement of annuity paid (OPM) and compared it to what you described.

The gross annuity amount is what the client received in 2007, original contributions was what he put in while working, and taxable annuity is what is taxable. You put the gross amount on L. 16-A and the taxable annuity on L. 16-B. (Actually you bunny hop to the input page and it takes care of the where it goes) The health insurance premium goes to Sch A and the distribution code is normal, same as any regular 1099-R.

[indyscott]

I use the worksheet in the 1040 instructions for line 16a. You can get it by pressing f-1 from the box in line 16a. It basically amortizes the retiree's contributions/investment in the pension over their expected life. I make a new copy for each subsequent year's return for the client, and put it in the file for the next year.

The office of personnel, used to not put anything in the taxable portion box. I think they've started now, but I still use the amount I compute on the worksheet. IRS'll might call me someday and ask why I'm not using the amount reported on the 1099R, but at least I have a logical explanation that I've used consistently.

[michaelmars]

thank you everyone i try the calc and see if its worth the difference from the 1099r amount

[RDennis]

There is a taxable amount only for those folks who retired under FERS. The folks that retired under CSRS fall under three categories--ones who retired before July 2, 1986, those who retired between that date and before November 19, 1996, and finally those who retired after that date. You shouldn't have to recompute the taxable amount for the third category, or those who retired under FERS.

For more information, see IRS Pub 721.

Dennis