Hazardous Duty Pension

[BryanViger]

I am receiving a Hazardous Duty pension, and have both state and federal taxes being taken out. When I inputted my retirement pension, collected thus far, via monthly checks, it shows as a with drawl and I am being severely penalized ($6,000+) on my tax return. Is this correct?  

[DoninGA]

On the Form 1099-R you received for the pension what is the code entered in box 7? 

[DoninGA]

1—Early distribution, no known exception (in most cases, under age 59½)

Then you are being assessed a 10% early distribution penalty on the amount in box 1 of the Form 1099-R.  The penalty is entered on your federal tax return as a tax liability on Schedule 2 Line 8.  This amount flows to your federal tax return, Form 1040 Line 23.

[BryanViger]

Thank you. I am under the age you mentioned; however, this is a hazardous duty pension ("20 years of service and retire with full pension"). Not sure why it is being categorized as a withdrawal, thus me being penalized, when it is beyond my fault, that I retired prior to 59 1/2. Make sense?

[DoninGA]

You should speak with someone at DFAS because since this a pension and you are under the age of 59 1/2 it probably should have be coded with a 2 and Not a 1.  They should at the very least be able to tell you why it was coded this way.

2—Early distribution, exception applies (under age 59½)

Thank You for Your Service

From an Old Viet Nam veteran (US Army)

[BryanViger]

Thank you, and thank you for your service as well.

Stay safe Brother. 1*