Thrift Savings Plan Withdrawal is treated as Annuity or Pension

Forum|Forum|4 years ago
March 28, 2022
3 replies
10 views

My wife retired in 2020 and took money from her Thrift Savings Plan Account in 2021. We scheduled monthly withdrawals of cash throughout part of 2021. When I enter the information into TurboTax from the 1099-R, TurboTax is treating the funds as Pension Income, which is not correct.

In Box 7 of the 1099-R, the IRA/SEP/Simple box is NOT checked, which I believe is correct.

How do I get TurboTax to NOT treat this as pension income?

Thank you!

TurboTax Home & Biz Windows

ThomasM125

Level 15

Form 1099-R reports distributions from a retirement account, so that is considered a pension distribution. A Thrift Savings Plan is a tax deferred retirement plan, so it is technically a pension plan and is therefore referred to as such in TurboTax.

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dmertz

Level 15

The federal TSP follows the same rules as a 401(k). The IRS requires that distributions from 401(k) plans be included on Form 1040 lines 5a and/or 5b with pensions and annuities. Only distributions from IRAs go on lines 4a and/or 4b. The TSP is not an IRA.

kricksterAuthor

Level 2

Next problem. When I report an IRA, TurboTax NJ State asks me if I've already paid state income tax on some of the money. It does not seem to give me the opportunity to do the same for the pension and annuity (TSP). Am I missing something? Thank you!

ColeenD3

Level 15

If there was state withholding it would be on your 1099-R. Box 14 is State tax withheld.

Trg16

Level 2

I have the same problem. I see what the expert said but I still don't understand how/why that is a pension. I have looked at the IRS publications and I see nothing specific. Today I contacted TSP to inquire as to why it is treated as a pension.

dmertz

Level 15

On your tax return, any retirement plan that is not an IRA is deemed to be a pension plan.

The portion of the tax code that establishes the federal TSP specifies that the TSP generally follows the rules of section 401(k) of the tax code. Section 401 of the tax code is titled Qualified pension, profit-sharing, and stock bonus plans, so the TSP is treated as a pension for tax purposes.