Per our Expert SharonD007 - IRS Pub 575states that “The distribution must be made directly from the plan to the insurance provider”. The federal Pension Protection Act of 2006 contains a provision permitting eligible, retired public safety officers to exclude up to $3,000 for qualified health insurance premiums paid by them from their gross taxable income each year, as long as the premiums are deducted from their retirement benefit.
Based on the information that you provided, the premium that is withheld from your retirement distribution and forwarded to your ex-employer who pays for your healthcare qualifies as an exclusion up to $3,000.
Please see the instructions below to ensure that the eligible amount withheld will be excluded from your taxable income:
- Launch TurboTax and type in Form 1099-R by the magnify glass in the search panel
- Select Jump to 1099-R
- Add your 1099-R or edit the 1099-R that had your health insurance deducted
- Go through the questions and make sure to answer Yes to “this money came from employment as a Public Safety Officer (PSO)”
- Enter Yes to “money was taken out to pay for health insurance”
- Enter the amount of your pension that was paid directly to the plan administrator for health insurance.
@usanHL
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