Retired Public Safety Officer

[monrodian]

Several years ago the definition of "retired public safety officer" was changed to include Air Traffic Controllers. Did this change again for 2020?

[BillM223]

Are you referring to the $3000 distribution for health coverage for a retired public safety officer, or to the exemption in some cases from the 10% early distribution penalty?

The definitions for each are in different parts of the code.

It appears that air traffic controllers were added to the exemption for early distribution penalties.

[monrodian]

The $3000  for health care premiums.

[monrodian]

Thanks Bill. Several years ago Air Traffic Controllers were added to the definition of Public Safety Officer for the purpose of deducting their health care premiums. However, now I cannot find a reference for this change and current IRS publications do not include Air Traffic Controllers.

[Cynthiad66]

No, Air Traffic Controller is not considered a Public Safety Officer.

For taxation purposes, a Public Safety Officer (PSO) is defined as: "an individual serving a public agency in an official capacity, with or without compensation, as a law enforcement officer, as a firefighter, as a chaplain, or as a member of a rescue squad or ambulance crew."

Please see New law expands tax exemption to defined contribution government plans for additional information on Public Safty Employees:

The definition of qualified public safety employee is expanded to include federal employees who are law enforcement officers, customs and border protection officers, firefighters and  air traffic controllers.

 

[monrodian]

My spouse and I are both retired Public Safety Officers. We each have an individual health insurance plan. Combined, our health insurance premiums exceed $3000 which TurboTax flags as a problem (married, filing jointly). So should I ignore TurboTaxes warning on this matter and file anyway? 

[MaryM428]

When the taxpayer is an eligible "retired public safety officer", defined by the IRS as a "law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew", they can elect to exclude up to $3,000 of the distributions they receive from an eligible retirement plan from their taxable income

You can enter the federal Public Safety Officer exclusion by doing this in your tax return:

• Select the Wages and Income tab shown under the Federal Taxes heading
• Click the "I'll choose what I work on" button
• Scroll down to the Retirement and Social Security section
• Click Start or Update next to IRA, 401(K), Pension Plan Withdrawals (Form 1099-R)
• Begin navigating through the prompts, and select the "employed as safety officer" answer
• Answer Yes to the health insurance question, click Continue
• Enter the amount of health insurance premiums (the amount cannot exceed $3,000)
• Click Continue

The  Public Safety Officer retirement income exclusion varies from state to state.  TurboTax will ask if the income is public safety officer income.  Do this while in your return to determine if the exclusion applies for your state:

• Select the State tab
• Click Continue and select your State 
• Navigate through the prompts until you reach "Here's the income that (Your State) handles differently"
• Under the Retirement heading scroll to Retired Correctional, Law Enforcement, Fire, or Rescue Pension
• Click Start and begin answering the prompts to determine the income exclusion that you are allowed.

If you do not receive a prompt in the State section to enter the exclusion, then different rules may apply to your state.

Because you have more than $3000 in combined medial premiums, you can ignore that warning and continue to file.