Nonqualified Retirement Income

[xoxo232]

I retired in 2015 and began withdrawing from my personal rollover IRA. However, when my late husband died in 2008, I began receiving 1/2 of his Ohio State Teacher's Retirement System pension on a monthly basis and continue to do so. Is the STRS pension I started receiving before I retired considered as nonqualified retirement income?

[ThomasM125]

It would likely not be a non-qualified retirement income. To be non-qualified, the retirement plan would have not adhered to regulations established by the Employee Retirement Savings Act (ERISA). Since it is a government plan, it is likely a qualified plan. 

[xoxo232]

Thomas,

Thank you for your reply, but let me clarify. The STRS pension that I receive each month began long before my own retirement. It is not my own retirement benefit. It belonged to my late husband who began receiving it upon his retirement in about 1995 until he died in 2008 at which point I was still working. As his designated married survivor, I qualified to continue receiving 1/2 of his benefit each month after his death in 2008. Finally, when I personally retired in late 2015, I began to withdraw money each month from my own personal rollover IRA. The more I consider it, I don't see how this continuation of STRS benefits can qualify as "retirement" income on my personal tax return. In my case, it ends up not mattering anyway since my own IRA withdrawals are substantial enough to qualify for the maximum $200 Retirement Income credit on my Ohio State tax return. Nevertheless, I would still like a definitive answer for the record.

Thank you again.

[xoxo232]

Thomas, maybe what you're trying to say is that, in my case, it's neither nonqualified OR qualified.

[LindaS5247]

The distributions you are receiving from your husband's State Teachers Retirement system would be considered to be from a qualified retirement plan.

A qualified retirement plan is a retirement plan established by an employer that is designed to provide retirement income to designated employees and their beneficiaries, which meets certain IRS Code requirements in terms of both form and operation.

STRS Ohio is a qualified plan under Section 401(a) of the Internal Revenue Code. Membership in the system includes public school teachers and administrators and college and university faculty. Since April 1998, certain college and university faculty may select STRS Ohio or an alternative retirement plan.

Click here for information on Ohio STRS Benefits.

[xoxo232]

Thank you but still unsure if this would be considered qualified retirement income for ME since I am the one filing as a single person who never received this strs benefit as my own personal retirement income. I’m simply receiving it as a surviving wife. So if it’s not qualified for me then do I need to designate it as non-qualified when I’m filing my Ohio state return? Because I now have my own personal retirement income that qualifies me for the Ohio retirement income credit. So sounds like you are suggesting that if I did not

have my own personal retirement income, then I could still consider my STRS survivor benefit as qualified retired income in order to get the retirement income credit. 

[Vanessa A]

The fact that YOU are receiving the pension from your late husband does not change whether or not it is a qualified plan.  

The plan is qualified based while it is being earned because it meets the guidelines set up by the IRS, instead of if it is the employee or surviving spouse that is getting it.  Since the plan meets the criteria for a Qualified Plan, YOU will select that it is a qualified plan.  Whether or not you have your own qualified plan does not affect whether or not his plan was qualified.  If the plan was operated based on the guidelines when he was still working, that is all that matters when it comes to the surviving spouse. 

[xoxo232]

I apologize that I did not articulate my question well at all. I have posted it as a new question here: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/ohio-retirement-income-credit-an...