What kind of plan is OPM CSA Federal retirement, 403(b) of other? Is the General Rule or the Simplified Method be used to figure out the taxable amount of this annuity?

[lafblf21903]

Having trouble figuring out how the taxable annuity was figured.

[JamesG1]

Follow these steps to report the first year of receiving a pension from the Office of Personnel Management.  The Simplified Method will be used to compute the taxable amount.  Select Office of Personnel Management (CSA 1099-R) at the screen Why gave you a 1099-R.

TurboTax Online will use the simplified method to determine the taxable portion for box 2a of your CSA 1099-R.   Presume that: 

• Monthly payments were received, 
• Payments started in 2025, and 
• That box 7 is code 7.

You will need to know: 

• The amount of the employee contributions (should be in box 9b),
• The date the annuity started,
• The number of months that payments were received in 2025, 
• The age of the recipient when the annuity started,
• The age of other beneficiaries (if there are any), and 
• Was the recipient under the retirement age for the plan.

Follow these steps: 

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click on the down arrow to the right of Retirement Plans and Social Security.
• Click to the right of IRA 401(k) Pension Plan Withdrawal (1099-R).
• At the screen Who gave you a 1099-R, select  Office of Personnel Management (CSA 1099-R).
• At the screen Annuity information, select Yes for the question Did you get periodic payments from this retirement account on a regular basis?
• At the screen Annuity information, select Yes for the question Did you start getting payments in 2025.
• At the screen Annuity information, select No for the question For the years you received these distributions, was the total amount shown in the form the amount you paid tax on?
• At the screen Annuity information, enter the annuity start date, plan cost, months payments were received and amount recovered in previous years.  (This will be $0 if this is the first year that you receive the payment.)
• At the screen Annuity Information, Plan Cost should be in box 9b.
• At the screen Annuity Information, enter the beneficiary ages.
• The taxable amount will be computed by the simplified method.

View Federal 1040 tax return line 5a and 5b at Tax Tools / Tools / View Tax Summary / Preview my 1040.

[SteamTrain]

.........And it's not a 403b

[anonymouse1]

If you get a monthly pension payment from OPM for a federal retirement (even if part of it was a lump sum distribution to make up the difference between your final pension amount and the interim payments you had received when first retired), the 1099-R box 2a will have the taxable amount given to you.  Put the number from box 2a on the 1099-R into line 5b on your 1040.

[anonymouse1]

OPM uses the Simplified method for anyone retired since 1986.  When the nontaxable portion of your pension payments (line 1 minus line 2a of all your 1099-Rs to date) exceeds your own contributions to the pension plan, then line 2a will become the same as line 1.

[BobC01]

I retired in 2009, using the same entries you stated, but receiving the distribution prior to 2025.  Why are all the questions about Annuity start date, plan cost, and tax free amount recovered?  How do I go about getting the tax free amount recovered?

[SteamTrain]

@BobC01 

If your box 2a has a non-zero number in it..(not blank, nor zero, nor marked as undetermined), and that number is somewhat lower than the box 1 number, due to after-tax contributions...then edit that retirement form again, and when you get to the following page, answer it as-if the following edits were present  (i.e. you probably needed to answer YES)

_____________________________________

[anonymouse1]

TurboTax seems to be treating the pension as an annuity (like you would buy from an insurance company) this year.  I fixed all the questions about original cost and Simplified Method by selecting "No" as an answer to whether this was a periodic payment.  Just enter the CSA 1099-R information exactly as it's printed on the PDF form you downloaded from OPM.  That will put the amount from box 2a (and all the other boxes) on the right line(s) on the 1040.

[billjh]

Warning to federal pensioners. Turbo Tax mistakenly recomputed the non-taxable portion of my pension using its simplified method form. It also did it using 2025 as the first year. I answered the question about the taxable amount on the 1099 and said that it was correct. I also answered that 2025 was not the first year I received it. Nonetheless the software insisted on recomputing the simplified method and doing it incorrectly. Unfortunately I did not catch it before filing. C'est la vie!

[anonymouse1]

File an amended return.

[Wedding5500]

@JamesG1 ,very detailed info, thank you.

I need some additional help on this…

My husband retired from the Gov in 2016 and has employee contributions in Box 9b of his 1099-R.  The issue is that since he retired, I’ve not done anything to “recover” that dollar amount on our taxes because I didn’t know any better!

Every year I’ve input all dollar amounts from all boxes on his 1099-R and I’m assuming that I just answered “Yes, that .  Box 1 minus Box 2a, equals the yearly non-taxable portion of his contributions.  Divide that by 12 months, and it does come out to his “allowed” monthly non-taxable amount from his OPM booklet.

Can I just start recovering his contributions in 2025, without any tax consequences?  As long as my mistake in not having the Simplified General Rule worksheet filled out in TT doesn’t negatively affect the IRS and what they should receive from us, we’re ok with not amending the last couple returns (he only gets $12.14/mo that is non-taxable).

I also have a question with my Arizona State Retirement System (ASRS) pension. I have a dollar amount in Box 5 (Employee Contributions/ Designated Roth Contributions or insurance premiums).  Since I have no Roth contributions or health insurance premiums through ASRS, I’m assuming the dollar amount is my contribution into the system?  Box 1 minus Box 2a, equals the amount in Box 5.  But my Box 9b Total Employee Contributions is blank.  Do I have recoverable non-taxable? Is the dollar amount in my Box 5 non-taxable? If it is, can I also start recovering mine starting in the 2025 tax year even though I retired in 2022?

Thank you for any help you can provide!

[MarilynG1]

You should see the amount in Box 9a of the CSA 1099-R get smaller each year.  The OPM calculates a portion of his contributions to be recovered each year, which is why you have a different amount in Box 1 and Box 2a.  They most likely use a calculation based on retirement age and expected life.  When his contribution has been fully recovered, Box 1 and 2a will be equal amounts.  They don't expect you to have to calculate this, so you can enter your form as it is issued.  

For your Arizona Retirement, since you didn't contribute to an IRA, the Box 5 amount amount is most likely your employee contributions to the state retirement plan (a 403b plan) and they have correctly calculated your taxable amount for you in Box 2a.  Again, you don't need to do anything to recover your contributions, they are being calculated against your total distribution for you, so again, you can enter your 1099-R as issued. 

@Wedding5500 

[anonymouse1]

OPM does not change the amount in box 9b each year because that is the Total Employee Contributions.  But when they do put an amount in box 2a, it will be different for the first year (assuming you didn't start your pension in December with the first payment in January the next year) and the last year than the other years.  The nontaxable amount for each year is calculated using the Total employee contributions, the starting year of the pension, your age (and your spouse's age if you selected a survivor annuity), and the number of payments each year using the Simplified Method.  There is no box 9a on the CSA 1099-R.

[Wedding5500]

@anonymouse1, thank you for your response.

I agree - his Box 9b always stays the same.  Box 2 does indeed change year to year.  And when you subtract Box 1 from Box 2a, it must *always* equal $145.68 (which is does). When you divide the $145.68 difference by 12 months, that is the dollar amount of his monthly non-taxable income to recoup his contributions. So the dollar amount always coms out to $12.14/month of nontaxable income. This is correct.

I need to know what to do to start actually recovering his contributions, or is he already recovering his contributions because Box 1 and Box 2a are different?  Don’t I have to have TT prepare the Simplified Worksheet for it to start calculating his recovery?  I never did that when he first retired in 2016!!  Can I start it now?

Yes, you are correct, if I mentioned a Box 9a, that was my error, sorry.

Thank you. 

[Wedding5500]

@MarilynG1 , hello and thank you for your response.

No, Box 9b NEVER changes, it has been the same amount since he retired in October 2016.

His portion of yearly nontaxable income from his contributions is $145.77. You get this by subtracting Box 1 and 2a.

Don’t I have to have TT generate the Simplified Worksheet so it keeps track of how much of his contributions have been recovered?  I don’t understand - is he already recovering part of his contributions every year because of the difference in Box 1 and 2a?  Or do I need to check the NO box when I’m asked if the full amount is the taxable portion.  If I check no, then it comes up to start working on the Simplified Worksheet.

And I think I made a mistake on mine - I’ll have to go back to my old returns from 2022-forward. I purchased 15 years of my Federal Gov time to move it to the Arizona State Retirement System (ASRS) and I did use an IRA for part of that purchase.  But I believe it was a Trad IRA and not a Roth. But then later I opened a Roth IRA.  I’ll look into that and respond back if I need help.

Thanks very much.