FERs Retirees, anyone?

[Stoplight]

whenever talking FERS, be sure to use correct terminology, or you will confuse yourself and others. ...

Totally agree ! It's hard to answer questions when we mix up terminology !!! Social Security is a totally separate beast...the "3rd leg" of our FERS retirement stool !!! :smile:

My pet peeve is when someone calls their FERS pension an "annuity" ! An annuity is what you can buy from TSP, with all or part of your balance


Stoplight...

 

[pmaloney]

STOOL, What an appropriate word! :smile:
I spent part of the afternoon with Turbo Tax and calling OPM. Apparently you can't quite avoid the simplified plan for your Federal retirement which isn't really an annuity but they calculate it differently from the date of origin. The numbers don't matter too much but it is unexplainable and ridiculous.

Does anyone know how to navigate Turbo Tax with OPM Federal Retirement? Thanks in advance.

Pat

 

[Stoplight]

STOOL, What an appropriate word! :smile:

Pat,

LOL !!! Hey...I'm just citing the propaganda they gave us about the 3 leg FERS Retirement System...pension, TSP, and Social Security... :smile:

I don't use TurboTax, so no help from me...sorry !

I DID go back and look at my 1099, and it IS labelled as an "Annuity Paid"...go figure...

Well, I STILL think we should call it a "pension", just to keep terminology straight !


Stoplight...

 

[alevin]

Well now, I'm all ears for the answer to that one. Not that I'm ready to apply it, but gathering information ahead of time saves time in the crunch later on. what you said above sounded like Greek to me at this point. "they calculate it differently from the date of origin" wait, whaaaat??? Who they? simplified plan for federal retirement? got me there too. how did "they" simplify it?

 

[Scout333]

STOOL, What an appropriate word! :smile:
I spent part of the afternoon with Turbo Tax and calling OPM. Apparently you can't quite avoid the simplified plan for your Federal retirement which isn't really an annuity but they calculate it differently from the date of origin. The numbers don't matter too much but it is unexplainable and ridiculous.

Does anyone know how to navigate Turbo Tax with OPM Federal Retirement? Thanks in advance.

Pat

Pat, Just went through it so I'll give it a go. Basically, the simplified method is just a method of recovering our contributions into CSRS. There used to be several options to recover this cost but several years ago they made it automatic to use the so called simplified method. If you look on your 1099 R it will be the difference between the gross amount received (Box 1) and the taxable amount. For TurboTax you just take the amounts from the 1099 R and put them in the appropriate boxes. Hope this helps!

 

[nasa1974]

STOOL, What an appropriate word! :smile:
I spent part of the afternoon with Turbo Tax and calling OPM. Apparently you can't quite avoid the simplified plan for your Federal retirement which isn't really an annuity but they calculate it differently from the date of origin. The numbers don't matter too much but it is unexplainable and ridiculous.

Does anyone know how to navigate Turbo Tax with OPM Federal Retirement? Thanks in advance.

Pat

Being CSRS it was easy. OPM sends my pension information out as a 1098. Then I plug it into Turbo Tax as a 1098. What kind of form does a FERS pension show up as?

 

[clester]

Being CSRS it was easy. OPM sends my pension information out as a 1098. Then I plug it into Turbo Tax as a 1098. What kind of form does a FERS pension show up as?

Fers is the same. Just enter in info when it asks about retirement income. The tax free part is included. For tsp info it asks if you are taking series of equal payments. Click yes and it takes off the 10% penalty. Very easy. Turbo tax makes it very easy.

 

[Skorcher]

Fers is the same. Just enter in info when it asks about retirement income. The tax free part is included. For tsp info it asks if you are taking series of equal payments. Click yes and it takes off the 10% penalty. Very easy. Turbo tax makes it very easy.

Isnt' the nontaxable portion of your FERS pension very small? We only contribute 0.8% of our pay to FERS as opposed to the 7% CSRS people contribute.

 

[Stoplight]

Isnt' the nontaxable portion of your FERS pension very small? We only contribute 0.8% of our pay to FERS as opposed to the 7% CSRS people contribute.

S,

Yes, it's small....in my case, it's around $630/yr. If I remember correctly, in the OPM Retirement package you receive, they have those numbers broken out. In any case, the 1099 does show the gross distribution and the taxable amount, so as Scout noted, you can compute that number if you need to...


Stoplight...

 

[Maricar19]

FYI - taxation on FERS Special Retirement Supplement (SRS) is treated the same as Social Security benefits.

If your combined income is over $32,000, but below $44,000, then 50% of your FERS Supplement is subject to Federal income taxes.
If you have a combined income greater than $44,000, then 85% of your Supplement will be subject to Federal income taxes.

 

[Stoplight]

FYI - taxation on FERS Special Retirement Supplement (SRS) is treated the same as Social Security benefits.

If your combined income is over $32,000, but below $44,000, then 50% of your FERS Supplement is subject to Federal income taxes.
If you have a combined income greater than $44,000, then 85% of your Supplement will be subject to Federal income taxes.

MC,

Hmmmm...now that, there is an INTERESTING post ! On one hand, that kinda makes sense...

OTOH, I've NEVER seen anything that indicates that to be true ! In my personal case : the OPM 1099 indicates the gross distribution amount, and that includes the SRS. The taxable amount box includes the deduction for the pension contribution spread over 30 years, as discussed above. Nowhere do you have your SRS broken out, too, except in your original OPM booklet on how they calculated your payment !

How, and where, would you claim it on your tax return ? It's not on any tax form you get from OPM or Social Security ?? If you got some links to that info, I'm "all ears" !!! That WOULD be worth a couple of hundred bucks a year....

Thanks !


Stoplight...

 

[PessOptimist]

I am so glad I won't have 20 years federal time until I am 65. I don't have to worry about all this SRS stuff and what to do about taxes and how to spend my time after MRA. I just have to worry about living long and prospering off that retirement pay. Or not and the spouse bitching about how small the SBP is. Hmmm I won't have to care about that. Life is OK.

PO

 

[DreamboatAnnie]

MC,

Hmmmm...now that, there is an INTERESTING post ! On one hand, that kinda makes sense...

OTOH, I've NEVER seen anything that indicates that to be true ! In my personal case : the OPM 1099 indicates the gross distribution amount, and that includes the SRS. The taxable amount box includes the deduction for the pension contribution spread over 30 years, as discussed above. Nowhere do you have your SRS broken out, too, except in your original OPM booklet on how they calculated your payment !

How, and where, would you claim it on your tax return ? It's not on any tax form you get from OPM or Social Security ?? If you got some links to that info, I'm "all ears" !!! That WOULD be worth a couple of hundred bucks a year....

Thanks !


Stoplight...

The only place to report gross and taxable pension is in the first section of the 1040. On the left is box for gross and then on the line to the right that adds to your income is where you place number for portion that is taxable. So you compute that on your own and plug it in. Maybe might feel better if you put words "includes SRS" next to gross figure.

 

[Maricar19]

MC,

Hmmmm...now that, there is an INTERESTING post ! On one hand, that kinda makes sense...

OTOH, I've NEVER seen anything that indicates that to be true !

How, and where, would you claim it on your tax return ? It's not on any tax form you get from OPM or Social Security ?? If you got some links to that info, I'm "all ears" !!! That WOULD be worth a couple of hundred bucks a year....

Thanks !


Stoplight...

Hi SL, it's very true. I 'll let you know how to do it (taxation part) as soon as I retire...LOL..

Taxes and FERS, SRS annuities
BY REG JONES ON JULY 9, 2010 FERS ANNUITY COMPUTATION, RETIREMENT, SPECIAL RETIREMENT SUPPLEMENT
Q: Are the Federal Employees Retirement System and special retirement supplement annuities subject to federal income tax? If they are, and your FERS annuity is greater than $15,000, will the special retirement supplement be reduced?
A: The special retirement supplement is subject to federal (and, where applicable, state) taxes. However, your special retirement supplement would only be reduced if you had earnings from wages or self-employment. The Social Security earnings test doesn’t count other sources of income, such as annuities.

 

[Maricar19]

Can somebody please concur with me on the scenario below?

Spouse is at MRA (57) with 32 years of creditable service.
The 32 years include 10 years of military buy back.

Conclusions:
1. The 32 years of service entitles spouse to FERS supplement until age 62, but
2. Amount of FERS supplement($) will be based on 22 years of postal service only.

I am getting confused!

 

[Kaufmanrider]

Sounds right. Spouse has to have bought back the military time prior to retirement?

Special supplement is based on FERs creditable service, military time bought back only applies to the FEES retirement calculation.

Divide 22 by 40 and then use that percentage and multiply it to what the age 62 social security benefit will be. That's not exactly how it's done but will be close to what the special supplement will end up being.

The MRA +10 eligibility qualifies for the special supplement, not the 32 years of service.

 

[DreamboatAnnie]

Never mind. Links not working.

 

[konakathy]

I am getting confused!

That's because you're in postal management. :laugh: Sorry, couldn't resist. (jk)

 

[Stoplight]

Hi SL, it's very true. I 'll let you know how to do it (taxation part) as soon as I retire...LOL..

Taxes and FERS, SRS annuities
BY REG JONES ON JULY 9, 2010 FERS ANNUITY COMPUTATION, RETIREMENT, SPECIAL RETIREMENT SUPPLEMENT
Q: Are the Federal Employees Retirement System and special retirement supplement annuities subject to federal income tax? If they are, and your FERS annuity is greater than $15,000, will the special retirement supplement be reduced?
A: The special retirement supplement is subject to federal (and, where applicable, state) taxes. However, your special retirement supplement would only be reduced if you had earnings from wages or self-employment. The Social Security earnings test doesn’t count other sources of income, such as annuities.

Well, MC (and DBA !)....I beg to differ

I think you misread Mr Jones' post. The SRS IS subject to the same annual earnings test, like SS (before your full SS retirement age). Thus, it CAN be reduced in your Fed paycheck, IF you earn wages, after early retirement, above the limit. Your basic FERS annuity that you receive does NOT count towards that $15,000. That has nothing to do with any sliding scale "tax exempt" benefit, like with SS...Read his first sentence again !

BTW...OPM sends you a survey every year, asking you how much you "earned" last year.

Here's another post I found by Mr Jones (emphasis added by me) :

" Taxes on Social Security and special retirement supplement
0
By Reg Jones on July 3, 2013 PAY, Postal Service, RETIREMENT, SOCIAL SECURITY, Special retirement supplement, taxes

Q. When I retire, I will be 59½ and will have 30 years of service at the Postal Service. I will not have any earned income from that point on. I understand federal and state taxes will be taken out of my FERS annuity and any money I take out of my Thrift Savings Plan. Will I also have Supplemental Security Income deducted from these two sources? Also will my special retirement supplement and, when I turn 62, my SSI benefit also be subject to federal and state taxes?

A. Deductions for Social Security are only taken out of earnings from wages and self-employment, not other income. Your special retirement supplement will be treated as ordinary income and taxed accordingly. Your Social Security benefit will be taxed only to the extent that you have other substantial sources of income."

The funny thing about the internet (or TSPTalk !) is...you can find pages and pages of discussion, supporting either side !!! "It MUST be true....I read it on the internet !" But here's a post I found that I liked the best :

"The definative answer is that it's taxed like ordinary income. I can say this with great certainty because 1. I spend 20+ years in the IRS exam field and have knowledge of this subject 2. I'm an enrolled agent and 3. I'm retired and have been claiming this as ordinary income for 3 years now.

Now if you claim it like SS, you will receive a CP-2000 correcting it about a year later and you will pay the additional tax plus interest and late payment penalty."

Great discussion...HTH !

Stoplight...

 

[Maricar19]

That's because you're in postal management. :laugh: Sorry, couldn't resist. (jk)

Lol, KK, that is funny....and spouse is a carrier and doesn't want to deal with this... and ouch, he he he!