OPM CSA 1099R Tax Free recovery with Court Ordered Apportionment

[lafamiglia]

I'm hoping someone is currently experiencing the same and what they are doing in this situation.  Also any tax experts opinion welcome.

I have a QDRO with my ex-spouse.  Ex receives 18% of my Gross Pension and is to pay their own taxes. When married, we filed Fed taxes jointly.
The values in all boxes on my 1099R are correct. With box 2a "Taxable Amount" showing "Unknown", as expected.
There is a note at the bottom of my 1099R stating how much my ex received, which is correct, and it also states that the taxable amount is "Not Determined", this too as expected.

Box 9b shows the full amount that I contributed to my pension, which is also correct, and I understand is to be recovered over time tax free via the Simplified Method. For example purposes let's say 9b shows $200,000.

I have no idea what Ex's1099R shows in Box 9b.

My question is this:  I know I am to calculate my tax free portion using the Simplified Method, but does my ex also calculate some portion of the $200,000 using the Simplified Method?  In essence, do I get to use all of the $200,000 in my calculation or $164,000 (my portion of 82 less ex's 18%)?  If the answer is not $200,000; how do I go about showing the the difference of numbers in TurboTax used for the Simplified Method? Or do I just add a note somewhere explaining?

Thank you for reading all of this and any answers are much appreciated.

[Bsch4477]

@dmertz  can probably help you. 

[lafamiglia]

Thank you. 

[dmertz]

Splitting the plan under the QDRO, resulted in your ex receiving after-tax basis in the same proportion as the split of the overall pension.  For example, the the pension was split 50/50, 50% of the after-tax basis went to your ex and 50% remained with you.  Since box 9b shows that total after-tax basis that existed before the split, you would use the appropriate proportion of that amount with the Simplified Method as your investment in the plan.  Your ex would do the same.

Using a 82/18 split of $200,000 of the basis, your portion of the basis would be $164,000 and your ex's portion of the basis would be $36,000.  In TurboTax, "Plan Cost" is where your would put your portion of the after-tax basis .

If you received pension payments prior to 2023 and the split occurred after you began receiving the payments, you'll also need to proportionately adjust the Tax-Free Amount Previously Recovered so that it agrees with your 82%.

[lafamiglia]

Thank you for confirming what I believed was the way to do  it.   Your answer is much appreciated.

[DianeW777]

Yes.  Your ex-spouse will use a portion of your cost in the plan when calculating the taxable amount as shown in the link and posted for your convenience.

• QDRO Retirement Topic
  • The spouse or former spouse is allocated a share of the participant's cost (investment in the contract) equal to the cost times a fraction. The numerator of the fraction is the present value of the benefits payable to the spouse or former spouse. The denominator is the present value of all benefits payable to the participant.

@lafamiglia 

[lafamiglia]

Thank you for taking the time to answer and the reference.  

[Rehmma12]

I have the same situation but I’m confused as to specifically where to insert the amount my ex-husband is receiving from me.  What form is that information inserted on?? Thank you so much. 

[DianeW777]

The answer assumes due to the qualified domestic relations order (QDRO), a distribution was received by one or both of the spouses. Until a distribution is taken and must be reported on the tax return there is nothing to do on the tax return. 

However, you want to track the amount of your cost in the plan as a participant. Likewise you must track the amount that is awarded to your ex spouse as being their cost in the plan (investment in the contract) based on the divorce agreement.  As noted: The numerator of the fraction is the present value of the benefits payable to the spouse or former spouse. The denominator is the present value of all benefits payable to the participant (you).  The difference would be your cost in the plan for the time you take distribution.

You would need an OPM CSA-1099R to enter the distribution and your cost in the plan if you actually had a distribution yourself. The plan administrator would be required to make distribution based on the divorce decree and would likely be submitted to them by your attorney.

@Rehmma12