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Level 2

Question

Pension payment came early

Forum|Forum|4 years ago
February 6, 2022
3 replies
7 views

Former employer changed companies 12/1/21. Old company paid on 1st of each month. New company paid me on 12/29/21, which leaves me with 13 credits in 12 months. They say it's because they want to "settle with employer pension plan on the 1st, so we get paid early. Ignore the payment in 2021 and will be included in 2022 1099-R."

Do I have a problem?

Not A Product Question

Level 15

No, you don't have an IRS problem. It does sound like you're going to get a 1099-R that will reflect 13 months of pension payments. If you post the 1099-R as is, it will not be a problem for the IRS.

However, you may incur additional tax because of the added distribution. This may affect the taxability of Social Security, and hopefully you have sufficient tax withholding to accommodate the added income.

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Robert H 0208Author

Level 2

I am not getting a 1099-R from the company that credited me in 2021. They are adding it to 2022. I agree the IRS would never know, but wouldn't I be in violation of not reporting income in the year in which it was earned?

Level 15

You are correct that you would technically be reporting the transaction in the wrong year. You have an honest heart!

However, if the new company is not going to issue a 1099-R this year, you will have to file a substitute 1099-R.

You will have to prepare adjusted 1099-Rs for as long as you live, because they will always be off by one month.

Also, how are you going to explain this to the IRS?

I suggest that you file the paperwork (1099-R's) based on what you receive in each year. The IRS will consider this the proper documentation.

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