PS-58 Costs

Forum|Forum|6 years ago
February 15, 2020
2 replies
9 views

I took an IRA taxable distribution in 2019, however I have I have PS-58 income that was previously taxed in the years of my contributions and I can now offset that PS-58 income from my taxable distribution. How do I do that in Turbo Tax?

macuser_22

Alumni - Champ

PS-58? Do you mean life insurance? That would have nothing to do with a IRA distribution whatsoever.

You may or may not receive a separate 1099-R from the live insurance company that will be totally independent of the 1099-R for the IRA distribution.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

JimmyHAuthor

Level 2

In early 1990's my pension plan supplied me with 1099-R's each year representing the life insurance portion that needed to be reported, both federal & state on my tax returns. Along with the 1099-R was a letter from the Pension Trustee advising to keep track of all PS-58 costs each year, as they were "deductible against the income you will receive from the pension plan at retirement". I don't know how to record these costs in Turbo Tax.

jaelbiz11

Level 2

For qualified pension plans and where employer is paying the premium out of employer contributions, the participants must annually recognize the portion of the premium paid for the current year's insurance coverage, reporting the economic benefit as taxable income. The amount reported as income is equivalent to the premium paid on a term life insurance policy for 1 year for the face value of the plan policy.

When calculated for a participant, the plan administrator issues the participant a Form 1099-R to include in gross income for the year. The participant's account receives a basis for the cost and the participant is not taxed again on this basis when the insurance contract is distributed to the participant or when life insurance proceeds are distributed to the beneficiary.
See:

http://irs.gov/retirement-plans/fully insured 412e3 plans