Change in pension payer increases my income tax.

[naples15]

Hi,

My pension plan changed payers from State Street to The Northern Trust in May 2020.  I ran a preliminary tax return by adding the entire pension amount for 2020 onto the existing State Street 1099R as I had not yet received the Northern Trust 1099R.   I now have that 1099R and when I enter it and the amended State Street 1099R statements my tax due is now higher then what my preliminary tax return calculated.

My thought is that I need to somehow link the Annuity Information that is being used for the State Street payer to the new Northern Trust payer.

Any thoughts?

[macuser_22]

Delete both 1099-R's and re-enter using the actual forms.   After entering one, use the "add another 1099-R" button.

The 1040 form line 5a & 5b should show the total of both and should be what you actually received.

[dmertz]

Perhaps in the past you were using the Simplified Method (correctly or incorrectly) to calculate the taxable amount of the pension.  Examine the bottom of TurboTax's 1099-R form for this pension in your 2019 tax file to see if the Simplified Method was being used.

The Simplified Method is to be used only if you made after-tax payments into the pension, and the Form 1099-R has box 2b Taxable amount not determined marked or you know that the amount reported in box 2a is incorrect.

Also, if tax withholding is different from what you assumed on the old Form 1099-R that will change your refund or balance due.

And as macuser_22 said, make sure that you only have the old, transferred-in form or the newly entered form present, not both.

[naples15]

Hi dmertz,

Yes, the Simplified method was used.  I have been receiving this pension since 2007 so don't remember if the Taxable amount not determined box was checked on the first 1099 I received.  Turbo Tax has been using this since then.  I did contribute to this pension plan if that information is needed.

I do have two 1099Rs for 2020 for this pension.  State Street payments for Jan - Apr and Northern Trust for the balance of the year so I need to input both.

[dmertz · Accepted solution]

Ah, now I understand why you have entered two Forms 1099-R.  Assuming that use of the Simplified Method was proper on the one from State Street, you'll need to replicate that information on the Northern Trust Form 1099-R by indicating that you received regular payments and that either you need to calculate the taxable amount or in some other way indicate that the amount in box 2a was not the correct taxable amount.

[naples15]

Thanks dmertz, I was able to duplicate the simplified method as recommended.