BillM223
Expert Alumni

Retirement tax questions

First, enter box 2a as blank.

 

Is it 9a or 9b that is marked "UNKNOWN"? 

 

If it's 9b, then you have a problem, because it means that the OPM did not keep track of any after-tax contributions you made to your pension while you were working. If that's true, shame on them.

 

The others above made reference to the "simplified" method. This is needed for taxpayers who have "basis" in their pension, that is, who have made after-tax payments to their pension while they were still working.

 

The thing is that since you have already paid tax on after-tax contributions, you don't have to pay tax again when these dollars are distributed back to you.

 

However, you don't get to pick and choose which dollars come back to you each year; the IRS has a formula for determining what percentage of each yearly distribution is "return of basis" (i.e., non-taxable) and what is earnings (i.e., taxable). This is the Simplified Method referred to above.

 

If you never made any after-tax contributions to your pension, then 100% of your pension is taxable. Don't worry, a lot of taxpayers don't make after-tax-contributions. Just set box 2a to be the same value as box 1 and go on, telling TurboTax that this really is your taxable amount.

 

BUT, if you want to try something else, call the OPM and ask them what the total of your after-tax contributions is...and if they say they don't know, ask them who else were you working for with the exact same pension so that they don't about the after-tax contributions.

 

This is one of the most frequent questions about 1099-Rs for pensions, so I over-answered this so that you would understand your situation better.

 

 

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