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New Member
posted May 17, 2021 11:12:49 AM

TurboTax is asking for a “Plan Cost at Annuity Start Date”. I will not have that for a Defined Benefit Plan. Can I leave Line 3 blank of the Simplified Method worksheet?

0 2 1928
2 Replies
Level 15
May 17, 2021 11:55:11 AM

That is required to calculate the non-taxable part.   Only that amount will not be taxable on a pro-rated basis.

 

See  IRS Pub 575 page 10

https://www.irs.gov/pub/irs-pdf/p575.pdf

 

In general, your cost is your net investment in the con-tract as of the annuity starting date (or the date of the dis-tribution if earlier). To find this amount, you must first fig-ure the total premiums, contributions, or other amounts you paid. This includes the amounts your employer con-tributed that were taxable to you when paid. However, see Foreign employment contributions, later. It doesn't include amounts withheld from your pay on a tax-deferred basis (money that was taken out of your gross pay before taxes were deducted). It also doesn't include amounts you con-tributed for health and accident benefits (including any additional premiums paid for double indemnity or disability benefits).

New Member
May 17, 2021 12:47:33 PM

Thanks for your prompt response. There was no investment on my part for this annuity. All was funded by my Employer - old school pension plan! No monies were withheld from my pay to fund this. I am expecting that this monthly retirement payment to me would be 100% taxable income?