topic Re: retirement pensions in Retirement tax questions

retirement pensions

sethornton51 — Tue, 22 Dec 2020 06:54:59 GMT

My wife is a retired teacher. When going through the 1099-R section on income, questions are being asked as if this account was an IRA. I am being asked if the RMD(Required minimum distribution) was issued? Why, this is a pension not an IRA!

Re: retirement pensions

DoninGA — Tue, 22 Dec 2020 13:26:57 GMT

If she is age 70 1/2 or older then All the retirement income is a RMD. If this is the case, just answer Yes and continue.

Re: retirement pensions

xmasbaby0 — Tue, 22 Dec 2020 13:28:03 GMT

The section for a 1099R is not yet ready.

The IRS is drafting new 1099R forms. Then the software has to be programmed for them, and the IRS has to test and approve of the software. It is a complex process because of the all the CARES changes. It could even be a couple of months—sometime in January or even February. Meanwhile if you are trying to plan, if you have 2019 desktop (CD/download software) for 2019 use the what if feature- in Forms mode-but it will not have that CARES stuff.

You can also try using the Taxcaster tool:

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

There are a number of 2020 forms that are still being revised by the IRS. Click on the REVIEW tab to see what form(s) you are waiting for and when it is estimated to be ready (when operational ….and dates are subject to change) ...

IRS Forms Availability Table for TurboTax Individual (Personal) Tax Products

State Forms Availability Table for TurboTax Individual (Personal) Tax Products

Re: retirement pensions

dmertz — Tue, 22 Dec 2020 14:45:02 GMT

To clarify what DoninGA said, all of the periodic distributions from the pension are RMD. In other words, they are not eligible for rollover, which is the reason that TurboTax asks the question.

Re: retirement pensions

Opus 17 — Tue, 22 Dec 2020 14:56:26 GMT

The RMD rule is that you must withdraw a minimum amount from your retirement account each year based on the size of the account and your life expectancy. You are required to drain the account at least partially during your lifetime, so that you can’t completely avoid taxes by having your children inherit it.

because the payments for traditional pensions are based on your life expectancy, traditional pensions automatically are considered to satisfy any RMD rules.