Introduction
This publication gives you the information you need to determine
the tax treatment of distributions you receive from your pension and
annuity plans and also shows you how to report the income on your
federal income tax return. How these distributions are taxed depends
on whether they are periodic payments (amounts received as
an annuity) that are paid at regular intervals over several years or
nonperiodic payments (amounts not received as an annuity).
What is covered in this publication?
Publication 575
contains information that you need to understand
the following topics:
- How to figure the tax-free part of periodic payments under a
pension or annuity plan, including using a simple worksheet for
payments under a qualified plan.
- How to figure the tax-free part of nonperiodic payments from
qualified and nonqualified plans, and how to use the optional methods
to figure the tax on lump-sum distributions from pension, stock bonus,
and profit-sharing plans.
- How to roll over distributions from a qualified retirement
plan or IRA into another qualified retirement plan or IRA.
- How to report disability payments, and how beneficiaries and
survivors of employees and retirees must report benefits paid to
them.
- When additional taxes on certain distributions may apply
(including the tax on early distributions from qualified retirement
plans and IRAs and the tax on excess accumulation).
What is not covered in this publication?
The following topics are not discussed in this publication:
- The General Rule. This is the method generally
used to determine the tax treatment of pension and annuity income from
nonqualified plans (including commercial annuities). For a qualified
plan, you generally cannot use the General Rule unless your annuity
starting date is before November 19, 1996. For more information on the
General Rule, see Publication 939,
General Rule for Pensions and
Annuities.
- Individual retirement annuity contracts. These
are annuity contracts issued by an insurance company that follow IRA
rules. See Publication 590,
Individual Retirement Arrangements
(IRAs) (Including Roth IRAs and Education IRAs).
- Civil service retirement benefits. If you are
retired from the federal government (either regular or disability
retirement) or are the survivor or beneficiary of a federal employee
or retiree who died, get Publication 721, Tax Guide to U.S. Civil
Service Retirement Benefits. Publication 721 covers the tax
treatment of federal retirement benefits, primarily those paid under
the Civil Service Retirement System (CSRS) or the Federal Employees'
Retirement System (FERS).
- Section 457 plans. If you are a state or local
government employee, or if you work for a tax-exempt organization, you
may be eligible to participate in a deferred compensation plan
established under section 457 of the Internal Revenue Code. These
plans are nonqualified retirement plans. This publication does not
provide detailed information on the special rules of section 457
plans. However, the General Information section of this
publication contains a brief description of the main features of
section 457 plans.
- Tax-sheltered annuity (TSA) plans. If you work
for a public school or certain tax-exempt organizations, you may be
eligible to participate in a TSA retirement plan offered by your
employer. Although this publication covers the treatment of benefits
under TSA plans, it does not cover other tax provisions that apply to
these plans. For further information on TSAs, see Publication 571,
Tax-Sheltered Annuity Programs for Employees of Public Schools
and Certain Tax-Exempt Organizations.
Help from IRS.
You can get help from the employee plans taxpayer assistance
telephone service between the hours of 1:30 p.m. and 3:30 p.m. Eastern
Time, Monday through Thursday, at (202) 622-6074. (This is not a
toll-free number.)
If you are reading this publication to find out how to report your
pension or annuity payments on your federal income tax return, be sure
to review the instructions on the back of Copy B of the Form 1099-R
that you received and the instructions for lines 16a and 16b of Form
1040.
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