retired civil servant (post office carrier)

[bstaxes]

TP retire from post office. TP says the pension is not taxable to the first couple of years. In researching, I found 'start date of annuity' talking about 1980's and other past dates. Is the start date of the annuity the day it was purchased or the day the tp starts the pension?? Confused because the pub keeps referencing prior dates. I understand the computation but not what date to use.

Recently have had my mind somewhere else.

Thanks

[kcjenkins]

Recovering your cost tax free. How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date.

If your annuity starting date is before July 2, 1986, either the Three-Year Rule or the General Rule (both discussed later) applies to your annuity.

If your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method (discussed later).

If your annuity starting date is after November 18, 1996, you must use the Simplified Method.

Under both the General Rule and the Simplified Method, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your cost, and the taxable part that is the amount of each payment that is more than the part that represents your cost (unless such payment is used for purposes discussed under Distributions Used To Pay Insurance Premiums for Public Safety Officers , later). The tax-free part is a fixed dollar amount. It remains the same, even if your annuity is increased. Generally, this rule applies as long as you receive your annuity. However, see Exclusion limit , later.

Pub 721

[bstaxes]

Found all of that but still don't know if the annuity starting is day of purchase or day you start collecting. Can't find a anything that defines start date.

Thanks KC for the reference.

[kcjenkins]

From the same Pub:

Annuity starting date. If you retire from federal government service on a regular annuity, your annuity starting date is the commencing date on your annuity statement from OPM. If something delays payment of your annuity, such as a late application for retirement, it does not affect the date your annuity begins to accrue or your annuity starting date.

[jasdlm]

I know I risk sounding like an idiot when asking, but isn't the employee cost listed in box 5 on the 1099R and subtracted from Box 1 (Gross Distribution) to get to Box 2 (Taxable Amount). I only have 1 retired postal worker (my father), and luckily he is retired recently, and I can still amend if I've done this incorrectly.

In other words, what I'm asking, is can you trust the 'taxable amount' on the 1099R?

Thanks.