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Level 1

Husband's company went belly up, after tax pension plan was taken over by feds. Been drawing from funds, on his death it started coming to me... is this taxable to me?

When the company husband was working for closed; we learned that the post tax pension plan he had been paying into had be moved to Fed.Gov't control by PBGC.   His choices were lump sum, 2. for his life span... 3. Upon his death, it would continue paying spouse until her death.   We chose option 3 despite a lower dollar amount per month.   Now he has passed, it has moved over to me; but Turbo Tax is asking me questions that I am not sure how to answer.   1. Such as what I will do with the money.   2.  If I made any after tax contributions to this retirement plan, then this amount may NOT be the correct taxable amount.   (His contributions all those years ago, were post tax... so why am I being questioned about some of this may be taxable now?)   Scared!!!  Option 3 on the "Lets Figure Out How Much is Taxable screen is indicating that the entire amount may be taxable!!!  WHY??? 

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Level 8

Husband's company went belly up, after tax pension plan was taken over by feds. Been drawing from funds, on his death it started coming to me... is this taxable to me?

These questions are standard questions when you enter a 1099R. For the question "What did you do with the money," if you are using it monthly just answer "I did something else with it" and then that yes you received regular payments.  

The question regarding after-tax contributions, should be answered on your 1099R.  You will see an amount in box 2 showing your taxable amount.  It is possible that at this point the entire monthly amount is taxable if the amount received already is greater than the amount he actually contributed. You can also contact your plan administrator to find out how much is from post-tax contributions.

Pensions are federally taxable in many situations. 

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Level 8

Husband's company went belly up, after tax pension plan was taken over by feds. Been drawing from funds, on his death it started coming to me... is this taxable to me?

These questions are standard questions when you enter a 1099R. For the question "What did you do with the money," if you are using it monthly just answer "I did something else with it" and then that yes you received regular payments.  

The question regarding after-tax contributions, should be answered on your 1099R.  You will see an amount in box 2 showing your taxable amount.  It is possible that at this point the entire monthly amount is taxable if the amount received already is greater than the amount he actually contributed. You can also contact your plan administrator to find out how much is from post-tax contributions.

Pensions are federally taxable in many situations. 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post