ToddL99
Expert Alumni

Retirement tax questions

As pension payments these are considered "retirement benefits" and are taxable. Retirement benefits paid early because of a disability are not generally tax-free - they are treated a bit differently, but are still taxable (for purposes of federal tax). 

 

If you retired due to a disability, the pension you receive through a company-paid plan counts as wage income until you reach the minimum retirement age (the age at which you can receive a pension if not disabled). Once you reach that minimum retirement age, the pension is no longer reported as wage income but as pension income. This is actually a benefit, since it will count as "Earned Income" for purposes of tax credits.

 

Disability benefits (e.g. short-term, long-term disability insurance benefits) may be non-taxable, depending on the circumstances. VA Disability benefits are non-taxable, and are not reported to you on a Form 1099-R

 

The following post provides additional information on the subject Is disability income taxable?