What needs to be put in box 7 of 1099-R for uk pension

[LinaJ2018 · Accepted solution]

You would enter the code 7 normal distribution in box 7. 

To enter the UK pension in TurboTax online program, you will need to create a substitute form 1099-R. 

Here are the steps:

• Sign in to your account and select Pick up where you left off
• At the right upper corner, type in 1099r, then Enter
• Select Jump to 1099r
• On-screen, Your 1099-R / Did you have any of this income in 2016 ?, answer Yes and select               Continue
• Next screen, Choose your bank or brokerage, select I'll type it in myself
• On the screen Tell Us Which 1099-R You Have, check the box I need to prepare a substitute 1099-R and follow the prompts.  
•  

As to the Federal ID, UK pensions often do not have the ID number.  Please try entering nine 9s.  If electronic errors occur due to 1099-R data entry, enter the pension under Miscellaneous income, see below instructions.  As long as the IRS has the pension reported and included in total income, it is not problematic. 

1.  Federal taxes / Wages & Income -Less Common Income ( very last section on the screen) 

2.  Select Miscellaneous Income, 1099-A, 1099-C- Start 

3.  Select Miscellaneous Income- Other income not already reported on a Form W-2 or Form 1099- Start 

For more information, see http://www.irs.gov/Businesses/The-Taxation-of-Foreign-Pension-and-Annuity-Distributions

[HarlanWebber]

I have been tearing my hair out on my UK Pension Distribution....

I am 56 years old, laid off from work when I was 52 or so.

(I have not gone back to work yet, so I guess I am retired...)

As far as my transaction... I have started UK Tax-free drawdowns from my UK Pension via a

pension commencement lump sum (PCLS)?   (PCLS, which is often known as ‘tax free cash’ or a ‘tax free lump sum’, is a tax free payment which most people can receive when they start accessing their pension benefits. It is normally 25% of the value of the pension benefits being accessed.)

If I do what you say, and use 7 in box 7, then I barely have any tax...

But I see an option 1, and if that is chosen due to me being under 59 1/2, it is bad.

As option 1, I get whacked with a 10% early withdrawal penalty...  As this is a UK pension, there is no 1099-R so I need to choose correctly.  I earned the money to fill this pension in the UK and it must have been pre-tax-investment via my employer.

If while taking advantage of the UK Tax Free benefit, the US hits me with early withdrawal penalties, I may as well pull money from my US 401k and wait till I am 59 1/2 to use the UK pension.

If I can't avoid this early withdrawal penalty, it is better to avoid the UK pension altogether.

I could just choose 7, but I want to clear my conscience and do it right.

 Thanks