topic Beneficiary of a Pension Fund to distribute to family in Deductions & credits

Beneficiary of a Pension Fund to distribute to family

oldfowler60 — Sun, 09 Feb 2020 04:44:40 GMT

My good friend of 25yrs died Aug 2019. Years ago she made me the beneficiary of her pension fund requesting I distribute the funds to her 3 grandsons. I did as she requested now I am concerned that this will affect my taxable income and screw up my ACA health care financial info. How do I report this income to the IRS and report that the after taxes the funds were distributed as requested? I have all the documentation, just don't know how to enter it.

Re: Beneficiary of a Pension Fund to distribute to family

macuser_22 — Sun, 09 Feb 2020 04:56:15 GMT

Unfortunately if you were the only named benificuary then the distribution belongs to you and you are responsible for the tax. What you do with the money is up to you. If you give it to the grandchildren then that is just a gift from you. If the amount to any one person is more then $15,000 then you must file a form 709 (gift tax return).

Your friend should have gotten tax advice before putting the burden on you and should have named the grand children as beneficiaries on the pension fund rather then you. By naming you as the sole benificuary what she asked is immaterial as far as tax law is concerned. Her request cannot override tax law.

If I were you, I would figure the amount of tax that you will need to pay and subtract that from the amount that you gift to the grandchildren so that you are not paying the tax but the inheritance is.

Re: Beneficiary of a Pension Fund to distribute to family

oldfowler60 — Mon, 17 Feb 2020 19:06:46 GMT

The taxes were planned for. They are not a problem. The issue and the question are about THE ACA Affordable Care Act.. I fear it will see this as income. Is there a way to report this without being penalized?

Re: Beneficiary of a Pension Fund to distribute to family

VictoriaD75 — Sun, 23 Feb 2020 22:36:17 GMT

No. The ACA insurance is based on income. You are able to report income changes to make adjustments to your premium tax credit as it is applied throughout the year, but it cannot be done retroactively.

Unfortunately, this one-time circumstance does affect your income on your return and will affect the income reporting on Form 8962 and the Premium Tax Credit calculation. This form reconciles the amount of the credit available to you with the amount already received as an Advance Premium Tax Credit. The result could be additional credit owed to you, or you may have to repay any amount already received in advance.

Reporting Income Changes ACA

Re: Beneficiary of a Pension Fund to distribute to family

oldfowler60 — Tue, 03 Mar 2020 22:17:13 GMT

So above It says I need to file a 709, I downloaded the form and printed it. It makes mention of schedule A do I also need to file my taxes on a schedule A? Can I get help filling this out if needed?

Re: Beneficiary of a Pension Fund to distribute to family

macuser_22 — Tue, 03 Mar 2020 20:16:48 GMT

An inherited pension is not your pension. It is income to you.

Re: Beneficiary of a Pension Fund to distribute to family

ThomasM125 — Tue, 03 Mar 2020 21:27:11 GMT

You should receive a form 1099-R reporting the distribution you received. You enter that in TurboTax as such and it will appear on your tax return as pension income.

Re: Beneficiary of a Pension Fund to distribute to family

oldfowler60 — Wed, 04 Mar 2020 05:06:40 GMT

but its not my pension its a gift.

Re: Beneficiary of a Pension Fund to distribute to family

KrisD15 — Sat, 07 Mar 2020 17:43:52 GMT

If you were the beneficiary, not the Power of Attorney, you received the funds.

If you agreed to gift the three grandchildren, that would be on you.

If there is more to the story, you might want to see an attorney about what was drawn up and how the funds are taxed.