BillM223
Expert Alumni

Retirement tax questions

"Turbo Tax will neither compute your taxable amount nor determine your recovered annuity cost"

 

Leaving aside the issue of a QDRO, TurboTax will calculate the taxable amount if you go through the Simplified Method interview. You get there by entering (1) that you have a qualified plan and (2) that you receive periodic payments.

 

The purpose of the Simplified Method is to ask for the amount of "Basis" you have in the pension or annuity, then return it to you tax-free over the course of the annuity. Basis (also called "cost") is the amount of after-tax dollars in the annuity, for which you don't pay tax when you receive them (because they are "after-tax").

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