MD State Retirement Pickup Contribution

[parrish21214]

Reference: Federal Taxes/Wages & Income: Where Is This Distribution From?

I've entered the source as MD State Retirement Agency Pickup Contribution

Intuit software lists "Pickup contribution - State Retirement Pickup - Box 17"

My MD State Retirement Agency 1099-R shows pickup contributions in Box 19, not Box 17.  (Box 17 is Local Tax Withheld). Why the difference?

[dmertz]

For 2020 the IRS renumbered box 17 to be box 19.  TurboTax developers failed to make the corresponding update to the text.

[parrish21214]

Thanks. I'll proceed accordingly.

[Englander2022]

Was this question related to whether a Maryland state pension (source) was from pick up contributions as I am unsure whether to check that box or "none of the above"?

[MaryK4]

Pick-Up Contributions-

The State Pick-up Program is concerned with the employee pension plan contributions made while working. It provides for the deferral of federal taxes when the contributions are made, but makes them taxable when received in the pension. Since this program only defers federal taxes at the time the contributions are made, state income taxes were deducted. The consequence in retirement is that the state income tax is deferred until the pick-up contributions are recovered.

See SRPS Retiree News and Notes page 3 for more info.

@Englander2022

[Englander2022]

I am not sure why Turbotax is asking for the source of my State Pension income for 2021 and asks if it is from Pickup Contributions. Not sure how to answer that question. Should there be something on the 1099-R that corresponds to the letters in Turbotax regarding the source? 

[ThomasM125]

Your form 1099-R from the Maryland State Retirement Agency should report the amount of your pickup contributions in line 19. You would only have them if you participated in the State Pick-up Program wherein you would contribute money to your retirement plan, that would then not be taxed when you took your pension distribution.

[Anonymous]

The question is what do I do with the Box 19 amount? In the program it says I must enter the amount, but it refers to it as a carryover. I'm not sure I included the 2020 amount in the return either so while it says that I can enter any 2020 carryover in 2021, how would I find out what portion, if any, of the pickup contribution amount is a carryover?

[JohnW152]

@Anonymous

You use the Box 19 amount as a subtraction from income on Line “r” on Form 502SU, Subtractions from Income.  

Your subtraction in a given year is limited to the amount of pick-up contribution reflected on your Form 1099-R or the taxable pension, whichever amount is less. 

Any remainder of the pick-up amount is then carried over to your next year's taxes. When your pick-up amount reaches zero, “EP USED” will be printed in the pick-up block on your 1099-R. 

Please see 2021 state & local tax forms & instructions and Get the most from your 1099-R tax statement for more information.

[Mucous10]

This problem has been around long enough for Turbotax to have corrected it.  If one places the Maryland Retirement Agency  Pick-Up Contribution amount on Line 17 of Turbotax, it is incorrectly credited as a full Maryland tax payment, not a reduction in the taxable amount.  If one places the amount on Line 19 of Turbotax, there is no deduction - no reduction in my MD taxes due.  So there seems to be no discernable reason for entry in either lines 17 or 19 because the numbers are not populated into line "r" of Maryland Form 502SU.

Turbotax  screwed up MD taxes a few years ago, in the wake of the new GOP tax code, and they don’t seem to care enough to prevent Maryland retirees from paying MD taxes twice on the same money.