OPM CSA 1099R with Court Ordered Apportionment

[BillM223]

"Turbo Tax will neither compute your taxable amount nor determine your recovered annuity cost"

Leaving aside the issue of a QDRO, TurboTax will calculate the taxable amount if you go through the Simplified Method interview. You get there by entering (1) that you have a qualified plan and (2) that you receive periodic payments.

The purpose of the Simplified Method is to ask for the amount of "Basis" you have in the pension or annuity, then return it to you tax-free over the course of the annuity. Basis (also called "cost") is the amount of after-tax dollars in the annuity, for which you don't pay tax when you receive them (because they are "after-tax").

[katwilli58]

I have the same issue with apportionment going to ex wife.  when going thru interview it asks for the gross amount, the cost basis and amounts previously recovered tax free.  I don't know where to find the number for amounts previoulsy recoered tax free.  

Example:  Gross distribution: 80,000, Taxable amount: unknown, Employee contributions 57,000  and a NOTE stating 10,000 was paid to Ex under court ordered apportionment    Can I get a taxable amount from these numbers or do I need to dig deeper?

[katwilli58]

And is the Gross amount really a combination of mine and my ex's apportionment?

[ShirlynW]

I advise you to contact your attorney or a local tax professional.

[busquets]

Gross Distribution (CSA 1099-R Box 1) is your total annuity BEFORE what the NOTE says was paid to your Ex under court ordered apportionment. What you state as your "Employee contributions", is that from Box 5 or Box 9b? Box 9b is your TOTAL Employee Contributions...what you paid into your retirement over the course of your government employment. You have already paid taxes on this amount. But OPM does not let you claim it (i.e. "recover it tax free") all at once. You have to distribute it over the course of your annuity. This depends on your age at your time of retirement.  You calculate this using the Simplified Method (see Worksheet A in the IRS's Publication 721 -"Tax Guide to U.S. Civil Service Retirement Benefits"). Once you determine the amount to be "recovered" (the amount of the year's annuity that is not taxable) using the worksheet, and once you start deducting this non-taxable amount, you need to keep track of the amount you recover over the years. That is because, in total, you cannot end up deducting more than you paid into the annuity (which is what is shown in Box 9b of your 1099-R.

[busquets]

Yes.

[busquets]

Yes...but your ex should have received her own 1099-R.

[Timjoh]

Did you get figured out how to get the Apportionment subtracted from the Gross Amount? I am having the same issue in getting ready for this coming tax season.

[Critter-3]

OPM should be sending the EX their share of the distribution AND issuing their own 1099-R.   If this is not happening then it is up to you to get  OPM a copy of the order so that this can be done properly.

If you don't then YOU will get the only 1099-R for the total distribution and then YOU  will pay  taxes on the entire distribution UNLESS your divorce decree states the amount is considered alimony and the divorce was completed prior to 2018. 

[katwilli58]

I have this same issue with OPM 1099R not showing taxable amount because ex spouse receives apportionment.  What did you do exactly to work around this to show correct amount in taxable amount of annuity also taking into consideration the amount of previously recovered tax free worked out in the simplified method worksheet?  This is driving me crazy!

[Bobo59]

PM 1099R court order apportionment

Saw this online: I'm presently the temporary "conduit" for the former spouse's

court-ordered benefits 34% , OPM Retirement Ops (#6738) tells me to contract my Lawyer if i have questions and or OPM Court Order Section (# 0222) who just have to answer their phone in months. Still awaiting a response from my Attorney & Her CPA. I'm thinking the guy just gets loved again 

I'm Still looking to write of what I paid off, Any suggestions?

Overview :

   If a court order directs OPM to pay a portion of an employee's first annuity to a former
spouse, but specifies that the employee must initially pay that portion themselves until OPM begins deducting it directly from their annuity, the employee is essentially acting as a temporary
"conduit" for the former spouse's court-ordered benefit until OPM receives and processes the
court order, at which point they will start deducting the specified amount directly from the
employee's monthly annuity and pay it to the former spouse. Key points to remember: Court
order requirement: A valid court order explicitly stating that OPM should pay a portion of the
annuity to the former spouse is necessary for OPM to take action. Temporary payment
responsibility: Until OPM starts processing the court order, the employee is responsible for
paying the former spouse's portion of the annuity directly, usually based on the percentage or
amount specified in the court order. Notification to OPM:

  The employee must submit a certified copy of the court order to OPM so they can begin deducting the appropriate amount from their
annuity and pay it directly to the former spouse. Potential for reimbursement: Once OPM starts
processing the court order, the employee should be able to claim reimbursement for any
payments they made to the former spouse on their behalf, which will be deducted from their
future annuity payments. Important considerations: Contact OPM: If you are in this situation, it's
crucial to contact OPM to understand the exact process for submitting the court order and
initiating the deduction from your annuity. Legal advice: Consult with an attorney if you have any
questions about the court order or the process for complying with it, especially regarding any
potential financial implications or concerns about the temporary payment arrangement.

posted

17 seconds ago

[MarilynG1]

If you received a 1099-R to report the distribution, enter it in TurboTax as shown.  Then you'll enter a subtraction under Other Income for the portion you paid to your ex-spouse.

To enter it as a negative in Other Income (which is the easiest for the IRS to understand):

• In TurboTax Online click on Federal on the left column
• Click on Wages & Income at the top
• Scroll all the way down to Miscellaneous Income, 1099-A, 1099-C. 
• On the next page, scroll all the way down to Other Reportable Income
• Say Yes to Any Other Taxable Income?
• In Other Taxable Income, enter a Description and (negative) Amount

Thank you for your service.

@Bobo59 

[katwilli58]

I believe if you have a QDRO and the 1099-R shows a note at the bottom  stating the amount paid to ex-spouse, it doesn't mean you subtract that amount from the gross distribution to get your taxable amount.  Isn't the gross amount your taxable amount as well?  I get so many "expert opinions" on this and when you call OPM all you get is a call center and nobody can answer your question.  I haven't found 1 definitive answer that states what the gross distribution consists of.  

[AmyC]

IRS | QDRO states: 

A spouse or former spouse who receives QDRO benefits from a retirement plan reports the payments received as if he or she were a plan participant. 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.

A QDRO distribution that is paid to a child or other dependent is taxed to the plan participant.

Thus, the IRS believes that each recipient has their own 1099-R. In fact, the Instructions for Forms 1099-R and 5498 state: Alternate Payee Under a QDRO

Distributions to an alternate payee who is a spouse or former spouse of the employee under a QDRO are reportable on Form 1099-R using the name and TIN of the alternate payee. If the alternate payee under a QDRO is a nonspouse, enter the name and TIN of the employee. However, this rule does not apply to IRAs; see Transfer of an IRA to spouse , earlier.

If your 1099-R is not correct, your options are limited:

• try and get it corrected
• file a 1099-R from you to the ex *(this allows the deduction @MarilynG1 mentioned above.
• live with it

*If you want to pass some of the income along to the ex- file a 1099-R from you to them. See General Instructions for Certain Information Returns.

Alimony and tax laws have changed but not all things related to them are changed. We have two sets of divorce rules in play based on the year of divorce so taxable to one may not be to another.

@katwilli58 

[rusty1992]

Question on the statement "Form CSA 1099-R. OPM places your Gross Distribution, BEFORE being reduced by the court-ordered apportionment, in Box 1."

if this is true, that the 1099 Gross distribution includes both the annuitant's portion and the ex-spouses portion, that that creates a problem for someone needing to Qualify for Medicaid.

The person in question is being told his income is too high to qualify for Medicaid - BECAUSE the 1099 includes his ex-spouse's portion of the annuity.   Has anyone experienced this situation?  Shouldn't Medicaid acceptance take note the 1099 footnote explaining the portion going directly to the ex-spouse?