topic Re: Pension Rollover in Retirement tax questions

Pension Rollover

paulfamily4 — Tue, 05 Nov 2019 18:03:24 GMT

Good Morning,

My husband is being told he can roll over his company pension into an IRA. Will this count as income on our tax returns. We have health insurance with the healthcare.gov and the premiums are dependent on our earned income.

Thank you,

Anita

Re: Pension Rollover

DoninGA — Tue, 05 Nov 2019 18:17:08 GMT

A direct rollover of a tax deferred retirement account from one trustee to another tax deferred retirement account trustee is not reported as taxable income on a tax return.

Re: Pension Rollover

Anonymous — Tue, 05 Nov 2019 18:19:16 GMT

First pensions are not earned income. second you are wrong - ACA premiums are based on household income not earned income. third, you husband should request a direct rollover. with a direct rollover there is no withholding and the amount isn't taxable. if he receives the distribution in cash, there will likely be withholding taxes, so he will have less cash to deposit into the IRA. that amount will be taxable unless its made up with funds from either of you. if under 59/12 any taxable amount will be subject to 10% early withdrawal penalties

Re: Pension Rollover

dmertz — Tue, 05 Nov 2019 19:00:19 GMT

Any distribution from the pension plan is reportable on Form 1099-R and on your tax return, but rolling the entire gross amount over to an traditional IRA will make it nontaxable. (Only a trustee-to-trustee of an IRA to another IRA of the same type, traditional or Roth, is nonreportable. A pension plan is not an IRA.) Being nontaxable income, it won't affect ACA PTC.

As HACKITOFF said, done by direct rollover to a traditional IRA no tax withholding is required. A direct rollover will be reported with code G in box 7 of the Form 1099-R.