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Filing Amended Tax Returns

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Filing Amended Tax Returns

Filing amended tax returns 33. Filing amended tax returns   Credit for the Elderly or the Disabled Table of Contents Introduction Useful Items - You may want to see: Are You Eligible for the Credit?Qualified Individual Income Limits How to Claim the CreditCredit Figured for You Credit Figured by You Introduction If you qualify, you may be able to reduce the tax you owe by taking the credit for the elderly or the disabled which is figured on Schedule R (Form 1040A or 1040). Filing amended tax returns This chapter explains the following. Filing amended tax returns Who qualifies for the credit for the elderly or the disabled. Filing amended tax returns How to claim the credit. Filing amended tax returns You may be able to take the credit for the elderly or the disabled if: You are age 65 or older at the end of 2013, or You retired on permanent and total disability and have taxable disability income. Filing amended tax returns Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 554 Tax Guide for Seniors Form (and Instruction) Schedule R (Form 1040A or 1040) Credit for the Elderly or the Disabled Are You Eligible for the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. Filing amended tax returns You are a qualified individual. Filing amended tax returns Your income is not more than certain limits. Filing amended tax returns You can use Figure 33-A and Table 33-1 as guides to see if you are eligible for the credit. Filing amended tax returns Use Figure 33-A first to see if you are a qualified individual. Filing amended tax returns If you are, go to Table 33-1 to make sure your income is not too high to take the credit. Filing amended tax returns You can take the credit only if you file Form 1040 or Form 1040A. Filing amended tax returns You cannot take the credit if you file Form 1040EZ. Filing amended tax returns Qualified Individual You are a qualified individual for this credit if you are a U. Filing amended tax returns S. Filing amended tax returns citizen or resident alien, and either of the following applies. Filing amended tax returns You were age 65 or older at the end of 2013. Filing amended tax returns You were under age 65 at the end of 2013 and all three of the following statements are true. Filing amended tax returns You retired on permanent and total disability (explained later). Filing amended tax returns You received taxable disability income for 2013. Filing amended tax returns On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). Filing amended tax returns Age 65. Filing amended tax returns   You are considered to be age 65 on the day before your 65th birthday. Filing amended tax returns Therefore, if you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Filing amended tax returns U. Filing amended tax returns S. Filing amended tax returns Citizen or Resident Alien You must be a U. Filing amended tax returns S. Filing amended tax returns citizen or resident alien (or be treated as a resident alien) to take the credit. Filing amended tax returns Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. Filing amended tax returns Exceptions. Filing amended tax returns   You may be able to take the credit if you are a nonresident alien who is married to a U. Filing amended tax returns S. Filing amended tax returns citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. Filing amended tax returns S. Filing amended tax returns resident alien. Filing amended tax returns If you make that choice, both you and your spouse are taxed on your worldwide incomes. Filing amended tax returns If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. Filing amended tax returns S. Filing amended tax returns citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. Filing amended tax returns S. Filing amended tax returns resident alien for the entire year. Filing amended tax returns In that case, you may be allowed to take the credit. Filing amended tax returns For information on these choices, see chapter 1 of Publication 519, U. Filing amended tax returns S. Filing amended tax returns Tax Guide for Aliens. Filing amended tax returns Married Persons Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. Filing amended tax returns However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. Filing amended tax returns Head of household. Filing amended tax returns   You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet certain tests. Filing amended tax returns See Head of Household in chapter 2 for the tests you must meet. Filing amended tax returns Under Age 65 If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). Filing amended tax returns You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the close of the tax year. Filing amended tax returns Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. Filing amended tax returns If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. Filing amended tax returns Permanent and total disability. Filing amended tax returns    You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. Filing amended tax returns A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. Filing amended tax returns See Physician's statement , later. Filing amended tax returns Substantial gainful activity. Filing amended tax returns   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. Filing amended tax returns Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. Filing amended tax returns   Substantial gainful activity is not work you do to take care of yourself or your home. Filing amended tax returns It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. Filing amended tax returns However, doing this kind of work may show that you are able to engage in substantial gainful activity. Filing amended tax returns    The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. Filing amended tax returns Sheltered employment. Filing amended tax returns   Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. Filing amended tax returns These qualified locations are in sheltered workshops, hospitals, and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes. Filing amended tax returns   Compared to commercial employment, pay is lower for sheltered employment. Filing amended tax returns Therefore, one usually does not look for sheltered employment if he or she can get other employment. Filing amended tax returns The fact that one has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity. Filing amended tax returns Physician's statement. Filing amended tax returns   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. Filing amended tax returns You can use the statement in the Instructions for Schedule R. Filing amended tax returns    Figure 33-A. Filing amended tax returns Are You a Qualified Individual? This image is too large to be displayed in the current screen. Filing amended tax returns Please click the link to view the image. Filing amended tax returns Figure 33-A Are You a Qualified Individual?   You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records. Filing amended tax returns Veterans. Filing amended tax returns   If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. Filing amended tax returns VA Form 21-0172 must be signed by a person authorized by the VA to do so. Filing amended tax returns You can get this form from your local VA regional office. Filing amended tax returns Physician's statement obtained in earlier year. Filing amended tax returns   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. Filing amended tax returns For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. Filing amended tax returns If you meet the required conditions, check the box on your Schedule R, Part II, line 2. Filing amended tax returns   If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked. Filing amended tax returns Table 33-1. Filing amended tax returns Income Limits IF your filing status is . Filing amended tax returns . Filing amended tax returns . Filing amended tax returns THEN, even if you qualify (see Figure 33-A ), you CANNOT take the credit if. Filing amended tax returns . Filing amended tax returns . Filing amended tax returns   Your adjusted gross income (AGI)* is equal to or more than. Filing amended tax returns . Filing amended tax returns . Filing amended tax returns     OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. Filing amended tax returns . Filing amended tax returns . Filing amended tax returns   single, head of household, or qualifying widow(er) with dependent child   $17,500     $5,000   married filing jointly and only one spouse qualifies in Figure 33-A   $20,000     $5,000   married filing jointly and both spouses qualify in Figure 33-A   $25,000     $7,500   married filing separately and you lived apart from your spouse for all of 2013   $12,500     $3,750   * AGI is the amount on Form 1040A, line 22, or Form 1040, line 38. Filing amended tax returns Disability income. Filing amended tax returns   If you are under age 65, you must also have taxable disability income to qualify for the credit. Filing amended tax returns Disability income must meet both of the following requirements. Filing amended tax returns It must be paid under your employer's accident or health plan or pension plan. Filing amended tax returns It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability. Filing amended tax returns Payments that are not disability income. Filing amended tax returns   Any payment you receive from a plan that does not provide for disability retirement is not disability income. Filing amended tax returns Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. Filing amended tax returns   For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. Filing amended tax returns Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled. Filing amended tax returns Income Limits To determine if you can claim the credit, you must consider two income limits. Filing amended tax returns The first limit is the amount of your adjusted gross income (AGI). Filing amended tax returns The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. Filing amended tax returns The limits are shown in Table 33-1. Filing amended tax returns If your AGI and nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. Filing amended tax returns See How to Claim the Credit , later. Filing amended tax returns If either your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you cannot take the credit. Filing amended tax returns How to Claim the Credit You can figure the credit yourself or the Internal Revenue Service will figure it for you. Filing amended tax returns Credit Figured for You If you choose to have the IRS figure the credit for you, read the following discussion for the form you will file (Form 1040 or 1040A). Filing amended tax returns If you want the IRS to figure your tax, see chapter 30. Filing amended tax returns Form 1040. Filing amended tax returns   If you want the IRS to figure your credit, see Form 1040 Line Entries under Tax Figured by IRS in chapter 30. Filing amended tax returns Form 1040A. Filing amended tax returns   If you want the IRS to figure your credit, see Form 1040A Line Entries under Tax Figured by IRS in chapter 30. Filing amended tax returns Credit Figured by You If you choose to figure the credit yourself, fill out the front of Schedule R. Filing amended tax returns Next, fill out Schedule R, Part III. Filing amended tax returns If you file Form 1040A, enter the amount from Schedule R, line 22, on Form 1040A, line 30. Filing amended tax returns If you file Form 1040, include the amount from Schedule R, line 22, on line 53; check box c, and enter “Sch R” on the line next to that box. Filing amended tax returns For a step-by-step discussion about filling out Part III of Schedule R, see Figuring the Credit Yourself in Publication 524. Filing amended tax returns Limit on credit. Filing amended tax returns   The amount of the credit you can claim is generally limited to the amount of your tax. Filing amended tax returns Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited. Filing amended tax returns Prev  Up  Next   Home   More Online Publications
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The Filing Amended Tax Returns

Filing amended tax returns 10. Filing amended tax returns   Retirement Plans, Pensions, and Annuities Table of Contents What's New Reminder IntroductionThe General Rule. Filing amended tax returns Individual retirement arrangements (IRAs). Filing amended tax returns Civil service retirement benefits. Filing amended tax returns Useful Items - You may want to see: General InformationIn-plan rollovers to designated Roth accounts. Filing amended tax returns How To Report Cost (Investment in the Contract) Taxation of Periodic PaymentsExclusion limited to cost. Filing amended tax returns Exclusion not limited to cost. Filing amended tax returns Simplified Method Taxation of Nonperiodic PaymentsLump-Sum Distributions RolloversIn-plan rollovers to designated Roth accounts. Filing amended tax returns Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and Beneficiaries What's New For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). Filing amended tax returns However, these distributions are taken into account when determining the modified adjusted gross income threshold. Filing amended tax returns Distributions from a nonqualified retirement plan are included in net investment income. Filing amended tax returns See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Filing amended tax returns Reminder Starting in 2013, the American Taxpayer Relief Act of 2012 expanded the rules for in-plan Roth rollovers to include more taxpayers. Filing amended tax returns For more information, see Designated Roth accounts discussed later. Filing amended tax returns Introduction This chapter discusses the tax treatment of distributions you receive from: An employee pension or annuity from a qualified plan, A disability retirement, and A purchased commercial annuity. Filing amended tax returns What is not covered in this chapter. Filing amended tax returns   The following topics are not discussed in this chapter. Filing amended tax returns The General Rule. Filing amended tax returns   This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). Filing amended tax returns For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. Filing amended tax returns For more information about the General Rule, see Publication 939, General Rule for Pensions and Annuities. Filing amended tax returns Individual retirement arrangements (IRAs). Filing amended tax returns   Information on the tax treatment of amounts you receive from an IRA is in chapter 17. Filing amended tax returns Civil service retirement benefits. Filing amended tax returns    If you are retired from the federal government (regular, phased, or disability retirement), see Publication 721, Tax Guide to U. Filing amended tax returns S. Filing amended tax returns Civil Service Retirement Benefits. Filing amended tax returns Publication 721 also covers the information that you need if you are the survivor or beneficiary of a federal employee or retiree who died. Filing amended tax returns Useful Items - You may want to see: Publication 575 Pension and Annuity Income 721 Tax Guide to U. Filing amended tax returns S. Filing amended tax returns Civil Service Retirement Benefits 939 General Rule for Pensions and Annuities Form (and Instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Filing amended tax returns 4972 Tax on Lump-Sum Distributions 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts General Information Designated Roth accounts. Filing amended tax returns   A designated Roth account is a separate account created under a qualified Roth contribution program to which participants may elect to have part or all of their elective deferrals to a 401(k), 403(b), or 457(b) plan designated as Roth contributions. Filing amended tax returns Elective deferrals that are designated as Roth contributions are included in your income. Filing amended tax returns However, qualified distributions are not included in your income. Filing amended tax returns See Publication 575 for more information. Filing amended tax returns In-plan rollovers to designated Roth accounts. Filing amended tax returns   If you are a participant in a 401(k), 403(b), or 457(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan. Filing amended tax returns The rollover of any untaxed amounts must be included in income. Filing amended tax returns See Publication 575 for more information. Filing amended tax returns More than one program. Filing amended tax returns   If you receive benefits from more than one program under a single trust or plan of your employer, such as a pension plan and a profit-sharing plan, you may have to figure the taxable part of each pension or annuity contract separately. Filing amended tax returns Your former employer or the plan administrator should be able to tell you if you have more than one pension or annuity contract. Filing amended tax returns Section 457 deferred compensation plans. Filing amended tax returns    If you work for a state or local government or for a tax-exempt organization, you may be able to participate in a section 457 deferred compensation plan. Filing amended tax returns If your plan is an eligible plan, you are not taxed currently on pay that is deferred under the plan or on any earnings from the plan's investment of the deferred pay. Filing amended tax returns You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. Filing amended tax returns You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. Filing amended tax returns   Your 457(b) plan may have a designated Roth account option. Filing amended tax returns If so, you may be able to roll over amounts to the designated Roth account or make contributions. Filing amended tax returns Elective deferrals to a designated Roth account are included in your income. Filing amended tax returns Qualified distributions from a designated Roth account are not subject to tax. Filing amended tax returns   This chapter covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. Filing amended tax returns For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525, Taxable and Nontaxable Income. Filing amended tax returns   For general information on these deferred compensation plans, see Section 457 Deferred Compensation Plans in Publication 575. Filing amended tax returns Disability pensions. Filing amended tax returns   If you retired on disability, you generally must include in income any disability pension you receive under a plan that is paid for by your employer. Filing amended tax returns You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Filing amended tax returns Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Filing amended tax returns    You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Filing amended tax returns For information on the credit for the elderly or the disabled, see chapter 33. Filing amended tax returns   Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Filing amended tax returns Report the payments on Form 1040, lines 16a and 16b, or on Form 1040A, lines 12a and 12b. Filing amended tax returns    Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. Filing amended tax returns For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. Filing amended tax returns   For more information on how to report disability pensions, including military and certain government disability pensions, see chapter 5. Filing amended tax returns Retired public safety officers. Filing amended tax returns   An eligible retired public safety officer can elect to exclude from income distributions of up to $3,000 made directly from a government retirement plan to the provider of accident, health, or long-term disability insurance. Filing amended tax returns See Insurance Premiums for Retired Public Safety Officers in Publication 575 for more information. Filing amended tax returns Railroad retirement benefits. Filing amended tax returns   Part of any railroad retirement benefits you receive is treated for tax purposes as social security benefits, and part is treated as an employee pension. Filing amended tax returns For information about railroad retirement benefits treated as social security benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Filing amended tax returns For information about railroad retirement benefits treated as an employee pension, see Railroad Retirement Benefits in Publication 575. Filing amended tax returns Withholding and estimated tax. Filing amended tax returns   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable parts of amounts paid to you. Filing amended tax returns You can tell the payer how much to withhold, or not to withhold, by filing Form W-4P. Filing amended tax returns If you choose not to have tax withheld, or you do not have enough tax withheld, you may have to pay estimated tax. Filing amended tax returns   If you receive an eligible rollover distribution, you cannot choose not to have tax withheld. Filing amended tax returns Generally, 20% will be withheld, but no tax will be withheld on a direct rollover of an eligible rollover distribution. Filing amended tax returns See Direct rollover option under Rollovers, later. Filing amended tax returns   For more information, see Pensions and Annuities under Tax Withholding for 2014 in chapter 4. Filing amended tax returns Qualified plans for self-employed individuals. Filing amended tax returns   Qualified plans set up by self-employed individuals are sometimes called Keogh or H. Filing amended tax returns R. Filing amended tax returns 10 plans. Filing amended tax returns Qualified plans can be set up by sole proprietors, partnerships (but not a partner), and corporations. Filing amended tax returns They can cover self-employed persons, such as the sole proprietor or partners, as well as regular (common-law) employees. Filing amended tax returns    Distributions from a qualified plan are usually fully taxable because most recipients have no cost basis. Filing amended tax returns If you have an investment (cost) in the plan, however, your pension or annuity payments from a qualified plan are taxed under the Simplified Method. Filing amended tax returns For more information about qualified plans, see Publication 560, Retirement Plans for Small Business. Filing amended tax returns Purchased annuities. Filing amended tax returns   If you receive pension or annuity payments from a privately purchased annuity contract from a commercial organization, such as an insurance company, you generally must use the General Rule to figure the tax-free part of each annuity payment. Filing amended tax returns For more information about the General Rule, get Publication 939. Filing amended tax returns Also, see Variable Annuities in Publication 575 for the special provisions that apply to these annuity contracts. Filing amended tax returns Loans. Filing amended tax returns   If you borrow money from your retirement plan, you must treat the loan as a nonperiodic distribution from the plan unless certain exceptions apply. Filing amended tax returns This treatment also applies to any loan under a contract purchased under your retirement plan, and to the value of any part of your interest in the plan or contract that you pledge or assign. Filing amended tax returns This means that you must include in income all or part of the amount borrowed. Filing amended tax returns Even if you do not have to treat the loan as a nonperiodic distribution, you may not be able to deduct the interest on the loan in some situations. Filing amended tax returns For details, see Loans Treated as Distributions in Publication 575. Filing amended tax returns For information on the deductibility of interest, see chapter 23. Filing amended tax returns Tax-free exchange. Filing amended tax returns   No gain or loss is recognized on an exchange of an annuity contract for another annuity contract if the insured or annuitant remains the same. Filing amended tax returns However, if an annuity contract is exchanged for a life insurance or endowment contract, any gain due to interest accumulated on the contract is ordinary income. Filing amended tax returns See Transfers of Annuity Contracts in Publication 575 for more information about exchanges of annuity contracts. Filing amended tax returns How To Report If you file Form 1040, report your total annuity on line 16a and the taxable part on line 16b. Filing amended tax returns If your pension or annuity is fully taxable, enter it on line 16b; do not make an entry on line 16a. Filing amended tax returns If you file Form 1040A, report your total annuity on line 12a and the taxable part on line 12b. Filing amended tax returns If your pension or annuity is fully taxable, enter it on line 12b; do not make an entry on line 12a. Filing amended tax returns More than one annuity. Filing amended tax returns   If you receive more than one annuity and at least one of them is not fully taxable, enter the total amount received from all annuities on Form 1040, line 16a, or Form 1040A, line 12a, and enter the taxable part on Form 1040, line 16b, or Form 1040A, line 12b. Filing amended tax returns If all the annuities you receive are fully taxable, enter the total of all of them on Form 1040, line 16b, or Form 1040A, line 12b. Filing amended tax returns Joint return. Filing amended tax returns   If you file a joint return and you and your spouse each receive one or more pensions or annuities, report the total of the pensions and annuities on Form 1040, line 16a, or Form 1040A, line 12a, and report the taxable part on Form 1040, line 16b, or Form 1040A, line 12b. Filing amended tax returns Cost (Investment in the Contract) Before you can figure how much, if any, of a distribution from your pension or annuity plan is taxable, you must determine your cost (your investment in the contract) in the pension or annuity. Filing amended tax returns Your total cost in the plan includes the total premiums, contributions, or other amounts you paid. Filing amended tax returns This includes the amounts your employer contributed that were taxable to you when paid. Filing amended tax returns Cost does not include any amounts you deducted or were excluded from your income. Filing amended tax returns From this total cost, subtract any refunds of premiums, rebates, dividends, unrepaid loans that were not included in your income, or other tax-free amounts that you received by the later of the annuity starting date or the date on which you received your first payment. Filing amended tax returns Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed. Filing amended tax returns Designated Roth accounts. Filing amended tax returns   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. Filing amended tax returns Your cost will also include any in-plan Roth rollovers you included in income. Filing amended tax returns Foreign employment contributions. Filing amended tax returns   If you worked in a foreign country and contributions were made to your retirement plan, special rules apply in determining your cost. Filing amended tax returns See Foreign employment contributions under Cost (Investment in the Contract) in Publication 575. Filing amended tax returns Taxation of Periodic Payments Fully taxable payments. Filing amended tax returns   Generally, if you did not pay any part of the cost of your employee pension or annuity and your employer did not withhold part of the cost from your pay while you worked, the amounts you receive each year are fully taxable. Filing amended tax returns You must report them on your income tax return. Filing amended tax returns Partly taxable payments. Filing amended tax returns   If you paid part of the cost of your pension or annuity, you are not taxed on the part of the pension or annuity you receive that represents a return of your cost. Filing amended tax returns The rest of the amount you receive is generally taxable. Filing amended tax returns You figure the tax-free part of the payment using either the Simplified Method or the General Rule. Filing amended tax returns Your annuity starting date and whether or not your plan is qualified determine which method you must or may use. Filing amended tax returns   If your annuity starting date is after November 18, 1996, and your payments are from a qualified plan, you must use the Simplified Method. Filing amended tax returns Generally, you must use the General Rule if your annuity is paid under a nonqualified plan, and you cannot use this method if your annuity is paid under a qualified plan. Filing amended tax returns   If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. Filing amended tax returns   If your annuity is paid under a qualified plan and your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. Filing amended tax returns Exclusion limit. Filing amended tax returns   Your annuity starting date determines the total amount of annuity payments that you can exclude from your taxable income over the years. Filing amended tax returns Once your annuity starting date is determined, it does not change. Filing amended tax returns If you calculate the taxable portion of your annuity payments using the simplified method worksheet, the annuity starting date determines the recovery period for your cost. Filing amended tax returns That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. Filing amended tax returns Exclusion limited to cost. Filing amended tax returns   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a recovery of the cost cannot exceed your total cost. Filing amended tax returns Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. Filing amended tax returns This deduction is not subject to the 2%-of-adjusted-gross-income limit. Filing amended tax returns Exclusion not limited to cost. Filing amended tax returns   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. Filing amended tax returns If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. Filing amended tax returns The total exclusion may be more than your cost. Filing amended tax returns Simplified Method Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. Filing amended tax returns For an annuity that is payable for the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. Filing amended tax returns For any other annuity, this number is the number of monthly annuity payments under the contract. Filing amended tax returns Who must use the Simplified Method. Filing amended tax returns   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you both: Receive pension or annuity payments from a qualified employee plan, qualified employee annuity, or a tax-sheltered annuity (403(b)) plan, and On your annuity starting date, you were either under age 75, or entitled to less than 5 years of guaranteed payments. Filing amended tax returns Guaranteed payments. Filing amended tax returns   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. Filing amended tax returns If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. Filing amended tax returns How to use the Simplified Method. Filing amended tax returns    Complete the Simplified Method Worksheet in Publication 575 to figure your taxable annuity for 2013. Filing amended tax returns Single-life annuity. Filing amended tax returns    If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. Filing amended tax returns Enter on line 3 the number shown for your age at the annuity starting date. Filing amended tax returns Multiple-lives annuity. Filing amended tax returns   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. Filing amended tax returns Enter on line 3 the number shown for the combined ages of you and the youngest survivor annuitant at the annuity starting date. Filing amended tax returns   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Filing amended tax returns Instead you must use Table 1 and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. Filing amended tax returns    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity next year. Filing amended tax returns Example. Filing amended tax returns Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. Filing amended tax returns Bill's annuity starting date is January 1, 2013. Filing amended tax returns The benefits are to be paid for the joint lives of Bill and his wife Kathy, age 65. Filing amended tax returns Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Filing amended tax returns Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. Filing amended tax returns Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. Filing amended tax returns Because his annuity is payable over the lives of more than one annuitant, he uses his and Kathy's combined ages and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet. Filing amended tax returns His completed worksheet is shown in Worksheet 10-A. Filing amended tax returns Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. Filing amended tax returns Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. Filing amended tax returns The full amount of any annuity payments received after 310 payments are paid must be included in gross income. Filing amended tax returns If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. Filing amended tax returns This deduction is not subject to the 2%-of-adjusted- gross-income limit. Filing amended tax returns Worksheet 10-A. Filing amended tax returns Simplified Method Worksheet for Bill Smith 1. Filing amended tax returns Enter the total pension or annuity payments received this year. Filing amended tax returns Also, add this amount to the total for Form 1040, line 16a, or Form 1040A, line 12a 1. Filing amended tax returns 14,400 2. Filing amended tax returns Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion*. Filing amended tax returns See Cost (Investment in the Contract) , earlier 2. Filing amended tax returns 31,000       Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Filing amended tax returns Otherwise, go to line 3. Filing amended tax returns         3. Filing amended tax returns Enter the appropriate number from Table 1 below. Filing amended tax returns But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. Filing amended tax returns 310     4. Filing amended tax returns Divide line 2 by the number on line 3 4. Filing amended tax returns 100     5. Filing amended tax returns Multiply line 4 by the number of months for which this year's payments were made. Filing amended tax returns If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Filing amended tax returns Otherwise, go to line 6 5. Filing amended tax returns 1,200     6. Filing amended tax returns Enter any amounts previously recovered tax free in years after 1986. Filing amended tax returns This is the amount shown on line 10 of your worksheet for last year 6. Filing amended tax returns -0-     7. Filing amended tax returns Subtract line 6 from line 2 7. Filing amended tax returns 31,000     8. Filing amended tax returns Enter the smaller of line 5 or line 7 8. Filing amended tax returns 1,200 9. Filing amended tax returns Taxable amount for year. Filing amended tax returns Subtract line 8 from line 1. Filing amended tax returns Enter the result, but not less than zero. Filing amended tax returns Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b 9. Filing amended tax returns 13,200   Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Filing amended tax returns If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers in Publication 575 before entering an amount on your tax return. Filing amended tax returns     10. Filing amended tax returns Was your annuity starting date before 1987? □ Yes. Filing amended tax returns STOP. Filing amended tax returns Do not complete the rest of this worksheet. Filing amended tax returns  ☑ No. Filing amended tax returns Add lines 6 and 8. Filing amended tax returns This is the amount you have recovered tax free through 2013. Filing amended tax returns You will need this number if you need to fill out this worksheet next year 10. Filing amended tax returns 1,200 11. Filing amended tax returns Balance of cost to be recovered. Filing amended tax returns Subtract line 10 from line 2. Filing amended tax returns If zero, you will not have to complete this worksheet next year. Filing amended tax returns The payments you receive next year will generally be fully taxable 11. Filing amended tax returns 29,800 TABLE 1 FOR LINE 3 ABOVE   AND your annuity starting date was— IF the age at annuity starting date was. Filing amended tax returns . Filing amended tax returns . Filing amended tax returns before November 19, 1996, enter on line 3. Filing amended tax returns . Filing amended tax returns . Filing amended tax returns after November 18, 1996, enter on line 3. Filing amended tax returns . Filing amended tax returns . Filing amended tax returns 55 or under 300 360 56–60 260 310 61–65 240 260 66–70 170 210 71 or older 120 160 TABLE 2 FOR LINE 3 ABOVE IF the combined ages at annuity starting date were. Filing amended tax returns . Filing amended tax returns . Filing amended tax returns   THEN enter on line 3. Filing amended tax returns . Filing amended tax returns . Filing amended tax returns 110 or under   410 111–120   360 121–130   310 131–140   260 141 or older   210 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Filing amended tax returns Who must use the General Rule. Filing amended tax returns   You must use the General Rule if you receive pension or annuity payments from: A nonqualified plan (such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan), or A qualified plan if you are age 75 or older on your annuity starting date and your annuity payments are guaranteed for at least 5 years. Filing amended tax returns Annuity starting before November 19, 1996. Filing amended tax returns   If your annuity starting date is after July 1, 1986, and before November 19, 1996, you had to use the General Rule for either circumstance just described. Filing amended tax returns You also had to use it for any fixed-period annuity. Filing amended tax returns If you did not have to use the General Rule, you could have chosen to use it. Filing amended tax returns If your annuity starting date is before July 2, 1986, you had to use the General Rule unless you could use the Three-Year Rule. Filing amended tax returns   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. Filing amended tax returns Who cannot use the General Rule. Filing amended tax returns   You cannot use the General Rule if you receive your pension or annuity from a qualified plan and none of the circumstances described in the preceding discussions apply to you. Filing amended tax returns See Who must use the Simplified Method , earlier. Filing amended tax returns More information. Filing amended tax returns   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. Filing amended tax returns Taxation of Nonperiodic Payments Nonperiodic distributions are also known as amounts not received as an annuity. Filing amended tax returns They include all payments other than periodic payments and corrective distributions. Filing amended tax returns Examples of nonperiodic payments are cash withdrawals, distributions of current earnings, certain loans, and the value of annuity contracts transferred without full and adequate consideration. Filing amended tax returns Corrective distributions of excess plan contributions. Filing amended tax returns   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. Filing amended tax returns To correct an excess, your plan may distribute it to you (along with any income earned on the excess). Filing amended tax returns For information on plan contribution limits and how to report corrective distributions of excess contributions, see Retirement Plan Contributions under Employee Compensation in Publication 525. Filing amended tax returns Figuring the taxable amount of nonperiodic payments. Filing amended tax returns   How you figure the taxable amount of a nonperiodic distribution depends on whether it is made before the annuity starting date, or on or after the annuity starting date. Filing amended tax returns If it is made before the annuity starting date, its tax treatment also depends on whether it is made under a qualified or nonqualified plan. Filing amended tax returns If it is made under a nonqualified plan, its tax treatment depends on whether it fully discharges the contract, is received under certain life insurance or endowment contracts, or is allocable to an investment you made before August 14, 1982. Filing amended tax returns Annuity starting date. Filing amended tax returns   The annuity starting date is either the first day of the first period for which you receive an annuity payment under the contract or the date on which the obligation under the contract becomes fixed, whichever is later. Filing amended tax returns Distribution on or after annuity starting date. Filing amended tax returns   If you receive a nonperiodic payment from your annuity contract on or after the annuity starting date, you generally must include all of the payment in gross income. Filing amended tax returns Distribution before annuity starting date. Filing amended tax returns   If you receive a nonperiodic distribution before the annuity starting date from a qualified retirement plan, you generally can allocate only part of it to the cost of the contract. Filing amended tax returns You exclude from your gross income the part that you allocate to the cost. Filing amended tax returns You include the remainder in your gross income. Filing amended tax returns   If you receive a nonperiodic distribution before the annuity starting date from a plan other than a qualified retirement plan (nonqualified plan), it is allocated first to earnings (the taxable part) and then to the cost of the contract (the tax-free part). Filing amended tax returns This allocation rule applies, for example, to a commercial annuity contract you bought directly from the issuer. Filing amended tax returns    Distributions from nonqualified plans are subject to the net investment income tax. Filing amended tax returns See the Instructions for Form 8960. Filing amended tax returns   For more information, see Figuring the Taxable Amount under Taxation of Nonperiodic Payments in Publication 575. Filing amended tax returns Lump-Sum Distributions This section on lump-sum distributions only applies if the plan participant was born before January 2, 1936. Filing amended tax returns If the plan participant was born after January 1, 1936, the taxable amount of this nonperiodic payment is reported as discussed earlier. Filing amended tax returns A lump-sum distribution is the distribution or payment in one tax year of a plan participant's entire balance from all of the employer's qualified plans of one kind (for example, pension, profit-sharing, or stock bonus plans). Filing amended tax returns A distribution from a nonqualified plan (such as a privately purchased commercial annuity or a section 457 deferred compensation plan of a state or local government or tax-exempt organization) cannot qualify as a lump-sum distribution. Filing amended tax returns The participant's entire balance from a plan does not include certain forfeited amounts. Filing amended tax returns It also does not include any deductible voluntary employee contributions allowed by the plan after 1981 and before 1987. Filing amended tax returns For more information about distributions that do not qualify as lump-sum distributions, see Distributions that do not qualify under Lump-Sum Distributions in Publication 575. Filing amended tax returns If you receive a lump-sum distribution from a qualified employee plan or qualified employee annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. Filing amended tax returns The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. Filing amended tax returns The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. Filing amended tax returns You may be able to use the 10-year tax option, discussed later, to figure tax on the ordinary income part. Filing amended tax returns Use Form 4972 to figure the separate tax on a lump-sum distribution using the optional methods. Filing amended tax returns The tax figured on Form 4972 is added to the regular tax figured on your other income. Filing amended tax returns This may result in a smaller tax than you would pay by including the taxable amount of the distribution as ordinary income in figuring your regular tax. Filing amended tax returns How to treat the distribution. Filing amended tax returns   If you receive a lump-sum distribution, you may have the following options for how you treat the taxable part. Filing amended tax returns Report the part of the distribution from participation before 1974 as a capital gain (if you qualify) and the part from participation after 1973 as ordinary income. Filing amended tax returns Report the part of the distribution from participation before 1974 as a capital gain (if you qualify) and use the 10-year tax option to figure the tax on the part from participation after 1973 (if you qualify). Filing amended tax returns Use the 10-year tax option to figure the tax on the total taxable amount (if you qualify). Filing amended tax returns Roll over all or part of the distribution. Filing amended tax returns See Rollovers , later. Filing amended tax returns No tax is currently due on the part rolled over. Filing amended tax returns Report any part not rolled over as ordinary income. Filing amended tax returns Report the entire taxable part of the distribution as ordinary income on your tax return. Filing amended tax returns   The first three options are explained in the following discussions. Filing amended tax returns Electing optional lump-sum treatment. Filing amended tax returns   You can choose to use the 10-year tax option or capital gain treatment only once after 1986 for any plan participant. Filing amended tax returns If you make this choice, you cannot use either of these optional treatments for any future distributions for the participant. Filing amended tax returns Taxable and tax-free parts of the distribution. Filing amended tax returns    The taxable part of a lump-sum distribution is the employer's contributions and income earned on your account. Filing amended tax returns You may recover your cost in the lump sum and any net unrealized appreciation (NUA) in employer securities tax free. Filing amended tax returns Cost. Filing amended tax returns   In general, your cost is the total of: The plan participant's nondeductible contributions to the plan, The plan participant's taxable costs of any life insurance contract distributed, Any employer contributions that were taxable to the plan participant, and Repayments of any loans that were taxable to the plan participant. Filing amended tax returns You must reduce this cost by amounts previously distributed tax free. Filing amended tax returns Net unrealized appreciation (NUA). Filing amended tax returns   The NUA in employer securities (box 6 of Form 1099-R) received as part of a lump-sum distribution is generally tax free until you sell or exchange the securities. Filing amended tax returns (For more information, see Distributions of employer securities under Taxation of Nonperiodic Payments in Publication 575. Filing amended tax returns ) Capital Gain Treatment Capital gain treatment applies only to the taxable part of a lump-sum distribution resulting from participation in the plan before 1974. Filing amended tax returns The amount treated as capital gain is taxed at a 20% rate. Filing amended tax returns You can elect this treatment only once for any plan participant, and only if the plan participant was born before January 2, 1936. Filing amended tax returns Complete Part II of Form 4972 to choose the 20% capital gain election. Filing amended tax returns For more information, see Capital Gain Treatment under Lump-Sum Distributions in Publication 575. Filing amended tax returns 10-Year Tax Option The 10-year tax option is a special formula used to figure a separate tax on the ordinary income part of a lump-sum distribution. Filing amended tax returns You pay the tax only once, for the year in which you receive the distribution, not over the next 10 years. Filing amended tax returns You can elect this treatment only once for any plan participant, and only if the plan participant was born before January 2, 1936. Filing amended tax returns The ordinary income part of the distribution is the amount shown in box 2a of the Form 1099-R given to you by the payer, minus the amount, if any, shown in box 3. Filing amended tax returns You also can treat the capital gain part of the distribution (box 3 of Form 1099-R) as ordinary income for the 10-year tax option if you do not choose capital gain treatment for that part. Filing amended tax returns Complete Part III of Form 4972 to choose the 10-year tax option. Filing amended tax returns You must use the special Tax Rate Schedule shown in the instructions for Part III to figure the tax. Filing amended tax returns Publication 575 illustrates how to complete Form 4972 to figure the separate tax. Filing amended tax returns Rollovers If you withdraw cash or other assets from a qualified retirement plan in an eligible rollover distribution, you can defer tax on the distribution by rolling it over to another qualified retirement plan or a traditional IRA. Filing amended tax returns For this purpose, the following plans are qualified retirement plans. Filing amended tax returns A qualified employee plan. Filing amended tax returns A qualified employee annuity. Filing amended tax returns A tax-sheltered annuity plan (403(b) plan). Filing amended tax returns An eligible state or local government section 457 deferred compensation plan. Filing amended tax returns Eligible rollover distributions. Filing amended tax returns   Generally, an eligible rollover distribution is any distribution of all or any part of the balance to your credit in a qualified retirement plan. Filing amended tax returns For information about exceptions to eligible rollover distributions, see Publication 575. Filing amended tax returns Rollover of nontaxable amounts. Filing amended tax returns   You may be able to roll over the nontaxable part of a distribution (such as your after-tax contributions) made to another qualified retirement plan that is a qualified employee plan or a 403(b) plan, or to a traditional or Roth IRA. Filing amended tax returns The transfer must be made either through a direct rollover to a qualified plan or 403(b) plan that separately accounts for the taxable and nontaxable parts of the rollover or through a rollover to a traditional or Roth IRA. Filing amended tax returns   If you roll over only part of a distribution that includes both taxable and nontaxable amounts, the amount you roll over is treated as coming first from the taxable part of the distribution. Filing amended tax returns   Any after-tax contributions that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. Filing amended tax returns To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. Filing amended tax returns For more information, see the Form 8606 instructions. Filing amended tax returns Direct rollover option. Filing amended tax returns   You can choose to have any part or all of an eligible rollover distribution paid directly to another qualified retirement plan that accepts rollover distributions or to a traditional or Roth IRA. Filing amended tax returns If you choose the direct rollover option, or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. Filing amended tax returns Payment to you option. Filing amended tax returns   If an eligible rollover distribution is paid to you, 20% generally will be withheld for income tax. Filing amended tax returns However, the full amount is treated as distributed to you even though you actually receive only 80%. Filing amended tax returns You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional or Roth IRA. Filing amended tax returns (See Pensions and Annuities under Tax Withholding for 2014 in chapter 4. Filing amended tax returns )    If you decide to roll over an amount equal to the distribution before withholding, your contribution to the new plan or IRA must include other money (for example, from savings or amounts borrowed) to replace the amount withheld. Filing amended tax returns Time for making rollover. Filing amended tax returns   You generally must complete the rollover of an eligible rollover distribution paid to you by the 60th day following the day on which you receive the distribution from your employer's plan. Filing amended tax returns (If an amount distributed to you becomes a frozen deposit in a financial institution during the 60-day period after you receive it, the rollover period is extended for the period during which the distribution is in a frozen deposit in a financial institution. Filing amended tax returns )   The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. Filing amended tax returns   The administrator of a qualified plan must give you a written explanation of your distribution options within a reasonable period of time before making an eligible rollover distribution. Filing amended tax returns Qualified domestic relations order (QDRO). Filing amended tax returns   You may be able to roll over tax free all or part of a distribution from a qualified retirement plan that you receive under a QDRO. Filing amended tax returns If you receive the distribution as an employee's spouse or former spouse (not as a nonspousal beneficiary), the rollover rules apply to you as if you were the employee. Filing amended tax returns You can roll over the distribution from the plan into a traditional IRA or to another eligible retirement plan. Filing amended tax returns See Rollovers in Publication 575 for more information on benefits received under a QDRO. Filing amended tax returns Rollover by surviving spouse. Filing amended tax returns   You may be able to roll over tax free all or part of a distribution from a qualified retirement plan you receive as the surviving spouse of a deceased employee. Filing amended tax returns The rollover rules apply to you as if you were the employee. Filing amended tax returns You can roll over a distribution into a qualified retirement plan or a traditional or Roth IRA. Filing amended tax returns For a rollover to a Roth IRA, see Rollovers to Roth IRAs , later. Filing amended tax returns    A distribution paid to a beneficiary other than the employee's surviving spouse is generally not an eligible rollover distribution. Filing amended tax returns However, see Rollovers by nonspouse beneficiary next. Filing amended tax returns Rollovers by nonspouse beneficiary. Filing amended tax returns   If you are a designated beneficiary (other than a surviving spouse) of a deceased employee, you may be able to roll over tax free all or a portion of a distribution you receive from an eligible retirement plan of the employee. Filing amended tax returns The distribution must be a direct trustee-to-trustee transfer to your traditional or Roth IRA that was set up to receive the distribution. Filing amended tax returns The transfer will be treated as an eligible rollover distribution and the receiving plan will be treated as an inherited IRA. Filing amended tax returns For information on inherited IRAs, see What if You Inherit an IRA? in chapter 1 of Publication 590, Individual Retirement Arrangements (IRAs). Filing amended tax returns Retirement bonds. Filing amended tax returns   If you redeem retirement bonds purchased under a qualified bond purchase plan, you can roll over the proceeds that exceed your basis tax free into an IRA (as discussed in Publication 590) or a qualified employer plan. Filing amended tax returns Designated Roth accounts. Filing amended tax returns   You can roll over an eligible rollover distribution from a designated Roth account into another designated Roth account or a Roth IRA. Filing amended tax returns If you want to roll over the part of the distribution that is not included in income, you must make a direct rollover of the entire distribution or you can roll over the entire amount (or any portion) to a Roth IRA. Filing amended tax returns For more information on rollovers from designated Roth accounts, see Rollovers in Publication 575. Filing amended tax returns In-plan rollovers to designated Roth accounts. Filing amended tax returns   If you are a plan participant in a 401(k), 403(b), or 457(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan. Filing amended tax returns The rollover of any untaxed amounts must be included in income. Filing amended tax returns See Designated Roth accounts under Rollovers in Publication 575 for more information. Filing amended tax returns Rollovers to Roth IRAs. Filing amended tax returns   You can roll over distributions directly from a qualified retirement plan (other than a designated Roth account) to a Roth IRA. Filing amended tax returns   You must include in your gross income distributions from a qualified retirement plan (other than a designated Roth account) that you would have had to include in income if you had not rolled them over into a Roth IRA. Filing amended tax returns You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions to the plan that were taxable to you when paid. Filing amended tax returns In addition, the 10% tax on early distributions does not apply. Filing amended tax returns More information. Filing amended tax returns   For more information on the rules for rolling over distributions, see Rollovers in Publication 575. Filing amended tax returns Special Additional Taxes To discourage the use of pension funds for purposes other than normal retirement, the law imposes additional taxes on early distributions of those funds and on failures to withdraw the funds timely. Filing amended tax returns Ordinarily, you will not be subject to these taxes if you roll over all early distributions you receive, as explained earlier, and begin drawing out the funds at a normal retirement age, in reasonable amounts over your life expectancy. Filing amended tax returns These special additional taxes are the taxes on: Early distributions, and Excess accumulation (not receiving minimum distributions). Filing amended tax returns These taxes are discussed in the following sections. Filing amended tax returns If you must pay either of these taxes, report them on Form 5329. Filing amended tax returns However, you do not have to file Form 5329 if you owe only the tax on early distributions and your Form 1099-R correctly shows a “1” in box 7. Filing amended tax returns Instead, enter 10% of the taxable part of the distribution on Form 1040, line 58 and write “No” under the heading “Other Taxes” to the left of line 58. Filing amended tax returns Even if you do not owe any of these taxes, you may have to complete Form 5329 and attach it to your Form 1040. Filing amended tax returns This applies if you meet an exception to the tax on early distributions but box 7 of your Form 1099-R does not indicate an exception. Filing amended tax returns Tax on Early Distributions Most distributions (both periodic and nonperiodic) from qualified retirement plans and nonqualified annuity contracts made to you before you reach age 59½ are subject to an additional tax of 10%. Filing amended tax returns This tax applies to the part of the distribution that you must include in gross income. Filing amended tax returns For this purpose, a qualified retirement plan is: A qualified employee plan, A qualified employee annuity plan, A tax-sheltered annuity plan, or An eligible state or local government section 457 deferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a direct transfer or rollover from one of the other plans listed here or an IRA). Filing amended tax returns 5% rate on certain early distributions from deferred annuity contracts. Filing amended tax returns   If an early withdrawal from a deferred annuity is otherwise subject to the 10% additional tax, a 5% rate may apply instead. Filing amended tax returns A 5% rate applies to distributions under a written election providing a specific schedule for the distribution of your interest in the contract if, as of March 1, 1986, you had begun receiving payments under the election. Filing amended tax returns On line 4 of Form 5329, multiply the line 3 amount by 5% instead of 10%. Filing amended tax returns Attach an explanation to your return. Filing amended tax returns Distributions from Roth IRAs allocable to a rollover from an eligible retirement plan within the 5-year period. Filing amended tax returns   If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from an eligible retirement plan to a Roth IRA, you take a distribution from the Roth IRA, you may have to pay the additional 10% tax on early distributions. Filing amended tax returns You generally must pay the 10% additional tax on any amount attributable to the part of the rollover that you had to include in income. Filing amended tax returns The additional tax is figured on Form 5329. Filing amended tax returns For more information, see Form 5329 and its instructions. Filing amended tax returns For information on qualified distributions from Roth IRAs, see Additional Tax on Early Distributions in chapter 2 of Publication 590. Filing amended tax returns Distributions from designated Roth accounts allocable to in-plan Roth rollovers within the 5-year period. Filing amended tax returns   If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from a 401(k), 403(b), or 457(b) plan to a designated Roth account, you take a distribution from the designated Roth account, you may have to pay the additional 10% tax on early distributions. Filing amended tax returns You generally must pay the 10% additional tax on any amount attributable to the part of the in-plan rollover that you had to include in income. Filing amended tax returns The additional tax is figured on Form 5329. Filing amended tax returns For more information, see Form 5329 and its instructions. Filing amended tax returns For information on qualified distributions from designated Roth accounts, see Designated Roth accounts under Taxation of Periodic Payments in Publication 575. Filing amended tax returns Exceptions to tax. Filing amended tax returns    Certain early distributions are excepted from the early distribution tax. Filing amended tax returns If the payer knows that an exception applies to your early distribution, distribution code “2,” “3,” or “4” should be shown in box 7 of your Form 1099-R and you do not have to report the distribution on Form 5329. Filing amended tax returns If an exception applies but distribution code “1” (early distribution, no known exception) is shown in box 7, you must file Form 5329. Filing amended tax returns Enter the taxable amount of the distribution shown in box 2a of your Form 1099-R on line 1 of Form 5329. Filing amended tax returns On line 2, enter the amount that can be excluded and the exception number shown in the Form 5329 instructions. Filing amended tax returns    If distribution code “1” is incorrectly shown on your Form 1099-R for a distribution received when you were age 59½ or older, include that distribution on Form 5329. Filing amended tax returns Enter exception number “12” on line 2. Filing amended tax returns General exceptions. Filing amended tax returns   The tax does not apply to distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after your separation from service), Made because you are totally and permanently disabled, or Made on or after the death of the plan participant or contract holder. Filing amended tax returns Additional exceptions for qualified retirement plans. Filing amended tax returns   The tax does not apply to distributions that are: From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees), From a qualified retirement plan (other than an IRA) to an alternate payee under a qualified domestic relations order, From a qualified retirement plan to the extent you have deductible medical expenses that exceed 10% (or 7. Filing amended tax returns 5% if you or your spouse are age 65 or older) of your adjusted gross income, whether or not you itemize your deductions for the year, From an employer plan under a written election that provides a specific schedule for distribution of your entire interest if, as of March 1, 1986, you had separated from service and had begun receiving payments under the election, From an employee stock ownership plan for dividends on employer securities held by the plan, From a qualified retirement plan due to an IRS levy of the plan, From elective deferral accounts under 401(k) or 403(b) plans or similar arrangements that are qualified reservist distributions, or Phased retirement annuity payments made to federal employees. Filing amended tax returns See Pub. Filing amended tax returns 721 for more information on the phased retirement program. Filing amended tax returns Qualified public safety employees. Filing amended tax returns   If you are a qualified public safety employee, distributions made from a governmental defined benefit pension plan are not subject to the additional tax on early distributions. Filing amended tax returns You are a qualified public safety employee if you provide police protection, firefighting services, or emergency medical services for a state or municipality, and you separated from service in or after the year you attained age 50. Filing amended tax returns Qualified reservist distributions. Filing amended tax returns   A qualified reservist distribution is not subject to the additional tax on early distributions. Filing amended tax returns A qualified reservist distribution is a distribution (a) from elective deferrals under a section 401(k) or 403(b) plan, or a similar arrangement, (b) to an individual ordered or called to active duty (because he or she is a member of a reserve component) for a period of more than 179 days or for an indefinite period, and (c) made during the period beginning on the date of the order or call and ending at the close of the active duty period. Filing amended tax returns You must have been ordered or called to active duty after September 11, 2001. Filing amended tax returns For more information, see Qualified reservist distributions under Special Additional Taxes in Publication 575. Filing amended tax returns Additional exceptions for nonqualified annuity contracts. Filing amended tax returns   The tax does not apply to distributions from: A deferred annuity contract to the extent allocable to investment in the contract before August 14, 1982, A deferred annuity contract under a qualified personal injury settlement, A deferred annuity contract purchased by your employer upon termination of a qualified employee plan or qualified employee annuity plan and held by your employer until your separation from service, or An immediate annuity contract (a single premium contract providing substantially equal annuity payments that start within 1 year from the date of purchase and are paid at least annually). Filing amended tax returns Tax on Excess Accumulation To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date (defined later). Filing amended tax returns The payments each year cannot be less than the required minimum distribution. Filing amended tax returns Required distributions not made. Filing amended tax returns   If the actual distributions to you in any year are less than the minimum required distribution for that year, you are subject to an additional tax. Filing amended tax returns The tax equals 50% of the part of the required minimum distribution that was not distributed. Filing amended tax returns   For this purpose, a qualified retirement plan includes: A qualified employee plan, A qualified employee annuity plan, An eligible section 457 deferred compensation plan, or A tax-sheltered annuity plan (403(b) plan)(for benefits accruing after 1986). Filing amended tax returns Waiver. Filing amended tax returns   The tax may be waived if you establish that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. Filing amended tax returns See the Instructions for Form 5329 for the procedure to follow if you believe you qualify for a waiver of this tax. Filing amended tax returns State insurer delinquency proceedings. Filing amended tax returns   You might not receive the minimum distribution because assets are invested in a contract issued by an insurance company in state insurer delinquency proceedings. Filing amended tax returns If your payments are reduced below the minimum due to these proceedings, you should contact your plan administrator. Filing amended tax returns Under certain conditions, you will not have to pay the 50% excise tax. Filing amended tax returns Required beginning date. Filing amended tax returns   Unless the rule for 5% owners applies, you generally must begin to receive distributions from your qualified retirement plan by April 1 of the year that follows the later of: The calendar year in which you reach age 70½, or The calendar year in which you retire from employment with the employer maintaining the plan. Filing amended tax returns However, your plan may require you to begin to receive distributions by April 1 of the year that follows the year in which you reach age 70½, even if you have not retired. Filing amended tax returns   If you reached age 70½ in 2013, you may be required to receive your first distribution by April 1, 2014. Filing amended tax returns Your required distribution then must be made for 2014 by December 31, 2014. Filing amended tax returns 5% owners. Filing amended tax returns   If you are a 5% owner, you must begin to receive distributions by April 1 of the year that follows the calendar year in which you reach age 70½. Filing amended tax returns   You are a 5% owner if, for the plan year ending in the calendar year in which you reach age 70½, you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the outstanding stock (or more than 5% of the total voting power of all stock) of the employer, or more than 5% of the capital or profits interest in the employer. Filing amended tax returns Age 70½. Filing amended tax returns   You reach age 70½ on the date that is 6 calendar months after the date of your 70th birthday. Filing amended tax returns   For example, if you are retired and your 70th birthday was on June 30, 2013, you were age 70½ on December 30, 2013. Filing amended tax returns If your 70th birthday was on July 1, 2013, you reached age 70½ on January 1, 2014. Filing amended tax returns Required distributions. Filing amended tax returns   By the required beginning date, as explained earlier, you must either: Receive your entire interest in the plan (for a tax-sheltered annuity, your entire benefit accruing after 1986), or Begin receiving periodic distributions in annual amounts calculated to distribute your entire interest (for a tax-sheltered annuity, your entire benefit accruing after 1986) over your life or life expectancy or over the joint lives or joint life expectancies of you and a designated beneficiary (or over a shorter period). Filing amended tax returns Additional information. Filing amended tax returns   For more information on this rule, see Tax on Excess Accumulation in Publication 575. Filing amended tax returns Form 5329. Filing amended tax returns   You must file Form 5329 if you owe tax because you did not receive a minimum required distribution from your qualified retirement plan. Filing amended tax returns Survivors and Beneficiaries Generally, a survivor or beneficiary reports pension or annuity income in the same way the plan participant would have. Filing amended tax returns However, some special rules apply. Filing amended tax returns See Publication 575 for more information. Filing amended tax returns Survivors of employees. Filing amended tax returns   If you are entitled to receive a survivor annuity on the death of an employee who died, you can exclude part of each annuity payment as a tax-free recovery of the employee's investment in the contract. Filing amended tax returns You must figure the taxable and tax-free parts of your annuity payments using the method that applies as if you were the employee. Filing amended tax returns Survivors of retirees. Filing amended tax returns   If you receive benefits as a survivor under a joint and survivor annuity, include those benefits in income in the same way the retiree would have included them in income. Filing amended tax returns If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule and recovered all of the cost tax free, your survivor payments are fully taxable. Filing amended tax returns    If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage to your initial survivor annuity payment called for in the contract. Filing amended tax returns The resulting tax-free amount will then remain fixed. Filing amended tax returns Any increases in the survivor annuity are fully taxable. Filing amended tax returns    If the retiree was reporting the annuity payments under the Simplified Method, the part of each payment that is tax free is the same as the tax-free amount figured by the retiree at the annuity starting date. Filing amended tax returns This amount remains fixed even if the annuity payments are increased or decreased. Filing amended tax returns See Simplified Method , earlier. Filing amended tax returns   In any case, if the annuity starting date is after 1986, the total exclusion over the years cannot be more than the cost. Filing amended tax returns Estate tax deduction. Filing amended tax returns   If your annuity was a joint and survivor annuity that was included in the decedent's estate, an estate tax may have been paid on it. Filing amended tax returns You can deduct the part of the total estate tax that was based on the annuity. Filing amended tax returns The deceased annuitant must have died after the annuity starting date. Filing amended tax returns (For details, see section 1. Filing amended tax returns 691(d)-1 of the regulations. Filing amended tax returns ) Deduct it in equal amounts over your remaining life expectancy. Filing amended tax returns   If the decedent died before the annuity starting date of a deferred annuity contract and you receive a death benefit under that contract, the amount you receive (either in a lump sum or as periodic payments) in excess of the decedent's cost is included in your gross income as income in respect of a decedent for which you may be able to claim an estate tax deduction. Filing amended tax returns   You can take the estate tax deduction as an itemized deduction on Schedule A, Form 1040. Filing amended tax returns This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. Filing amended tax returns See Publication 559, Survivors, Executors, and Administrators, for more information on the estate tax deduction. Filing amended tax returns Prev  Up  Next   Home   More Online Publications