1099-R Taxable Amount Not Determined

[lawrencejbauman]

I'm a retired federal employee.  My 1099-R shows my gross annuity amount reduced by approximately 50% and paid to my ex under court ordered apportionment.  The taxable amounts were not determined.  After drafting and reveiwing my federal taxes with turbotax, I noticed that the Simplified Method Smart Worksheet calculated a non-taxable amount greater than the amount calculated and used in my 1099-R's in all the years since 2008.  This doesn't seem right even though it results in less taxes and would like someone to explain this to me.      

[dmertz]

When half of your annuity was transferred to your ex-spouse under a QDRO, that was accompanied by half of your after-tax investment in the plan (Plan Cost in TurboTax).  Do your entries into the Simplified Method reflect that?

If the Form 1099-R shows an amount in box 2a and box 2b Taxable amount not determined is not marked, the IRS is going to go by the box 2a figure and you should not be using the Simplified Method worksheet unless you know the box 2a amount to be wrong.  IF you made no after-tax investment in the annuity, the entire amount is taxable and you should not be using the Simplified Method to calculate the taxable amount.

[lawrencejbauman]

No, my entries into the Simplified Method reflect my total contribution (and not half) as Plan Cost in TurboTax worksheet.  What steps do you suggest that I need to do to correct this matter? 

[ErnieS0]

Reduce your total contribution by half on the simplified method worksheet.

As @demrtz says you should not be using your total contribution if half your pension if your ex-spouse is receiving half your pension because half the plan cost was transferred along with the gross annuity amount.

[dmertz · Accepted solution]

You can delete and reenter the Form 1099-R, allowing you to re-specify the parameters for the Simplified Method upon reentry.  I haven't experimented with that, but I would guess that you would need to cut all of the dollar amounts in half, including the amount already paid, as if the pension was always half it's original size in all respects.  But if the payer provided a taxable amount in box 2a, I probably wouldn't use the Simplified Method at all (although I assume from the title of the original question that the payer indicated that taxable amount is unknown.