Your military retired pay is taxed the same whether you receive it before or after turning 59-1/2. The "59-1/2 year" rule only applies to withdrawals from qualified retirement plans such as an IRA or 401K. It does not apply to your military pension.
Military retired pay is taxable income, even if you are receiving VA disability payments. This is also the case for private-sector and other public-sector pensions - all are taxable. Your VA disability payments are, however, non-taxable and are not reported to the IRS.
Your military retired pay is taxed the same whether you receive it before or after turning 59-1/2. The "59-1/2 year" rule only applies to withdrawals from qualified retirement plans such as an IRA or 401K. It does not apply to your military pension.
Military retired pay is taxable income, even if you are receiving VA disability payments. This is also the case for private-sector and other public-sector pensions - all are taxable. Your VA disability payments are, however, non-taxable and are not reported to the IRS.
The "Online" software (not desktop) has an error for entering a Military 1099-R, with box 7 =7.....but just for the year they turn 59.5. It is being investigated and may be fixed in the next week or two.
Right now, to avoid any penalty using the "Online" software, you edit the 1099-R again, and when you get to the question that asks if you received any $$ before age 59.5.....you must answer "NO"....even if not true.
(On the page that asks if it was a qualified or nonqualified retirement plan, make sure you indicate it is a non-qualified plan....you may have already done that...but have to make sure that's what you select).
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For those using the desktop software, the age 59.5 question still appears, but it's essentially ignored, as long as the plan is a nonqualified plan (which is what a DFAS military retirement is..