topic Re: Expected Return on Contract for Pension Plan in State tax filing

Expected Return on Contract for Pension Plan

mdimunno1983 — Mon, 09 Mar 2026 08:52:48 GMT

I am attempting to file 2021 New Jersey State Income Taxes and income includes monthly payments from a pension plan. This is a payment plan that the taxpayer did not pay into, but was paid entirely by the employer over the course of their career. The pension continues until the end of their life. Turbotax is asking me for "Expected Return on Contract". What do I enter for this in the case of a pension that has no firm end date for payments (as they'll continue until the taxpayer dies)? It is insisting on a number other than zero. I have reached out to the plan administrator, but they informed me that they don't have any idea what to put there. Thanks in advance.

Re: Expected Return on Contract for Pension Plan

RobertB4444 — Wed, 09 Mar 2022 03:19:21 GMT

The IRS has a whole thing on calculating this number. It's a hassle, but it only happens the one time and you've done it for forever.

From the IRS website-

Single-life annuity.

If you are to get annuity payments for the rest of your life, find your expected return as follows. You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later).

You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. See Adjustments to Tables I, II, V, VI, and VIA following Table I.

Example.

Henry bought an annuity contract that will give him an annuity of $500 a month for his life. If at the annuity starting date, Henry's nearest birthday is 66, the expected return is figured as follows:

Annual payment ($500 × 12 months)$6,000

Multiple shown in Table V, age 66× 19.2

Expected return$115,200

If the payments were to be made to Henry quarterly and the first payment was made 1 full month after the annuity starting date, Henry would adjust the 19.2 multiple by +.1. His expected return would then be $115,800 ($6,000 × 19.3).

Here's a link to the IRS publication

Re: Expected Return on Contract for Pension Plan

mdimunno1983 — Wed, 09 Mar 2022 15:42:42 GMT

Thanks very much for the reply. Does it matter at all that this is a pension and not an annuity? Or are these really considered the same thing per the IRS? I'm sorry I don't have much experience with pensions and annuities at all.

Re: Expected Return on Contract for Pension Plan

DaveF1006 — Fri, 11 Mar 2022 00:32:12 GMT

Yes, this does matter. Turbo Tax may think this is an annuity rather than a pension. So let's see if we can correct the program to treat it as a pension and not as an annuity.

In your program, go to personal>personal income>
Retirement Plans and Social Security>IRA 401K ......
Select the 1099R that pertains to this issue
Delete it
Now add it back again
Select I'll type it in myself
When it asks Tell us which 1099R you have, make the first selection. All the other 1099R's listed there are annuity contracts.
Now enter the details of your 1099R
As yo scroll through the questions, When you reach the screen that asks where is this distribution from, indicate none of the above.
Next indicate this is a qualified plan
Then finish out the section.
Let me know if his works.

@mdimunno1983