Table of Contents
This publication gives you the information you need to determine the tax treatment of your pension and annuity income under the General Rule. Generally, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your net cost, and the taxable balance.
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A nonqualified plan (for example, a private annuity, a purchased commercial annuity, or a nonqualified employee plan),
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A qualified plan if:
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Your annuity starting date is before November 19, 1996 (and after July 1, 1986), and you do not qualify to use, or choose not to use, the Simplified Method, or
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You are 75 or over and the annuity payments are guaranteed for at least 5 years (regardless of your annuity starting date).
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The following are qualified plans.
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A qualified employee plan.
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A qualified employee annuity.
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A tax-sheltered annuity (TSA) plan or contract.
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Simplified Method. This method is covered in Publication 575. That publication also covers nonperiodic payments (amounts not received as an annuity) from a qualified pension or annuity plan, rollovers, special averaging and capital gain treatment of lump-sum distributions, and special additional taxes on early distributions, excess distributions, and excess accumulations (not making required minimum distributions).
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Individual retirement arrangements (IRAs). Information on the tax treatment of amounts you receive from an IRA is included in Publication 590, Individual Retirement Arrangements (IRAs).
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Life insurance payments. If you receive life insurance payments because of the death of the insured person, get Publication 525, Taxable and Nontaxable Income, for information on the tax treatment of the proceeds.
Internal Revenue Service
Individual Forms and Publications Branch
W:CAR:MP:T:I
1111 Constitution Ave. NW
Washington, DC 20224
Publication
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524 Credit for the Elderly or the Disabled
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525 Taxable and Nontaxable Income
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571 Tax-Sheltered Annuity Plans (403(b) Plans)
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575 Pension and Annuity Income
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590 Individual Retirement Arrangements (IRAs)
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721 Tax Guide to U.S. Civil Service Retirement Benefits
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910 Guide To Free Tax Services
Form (and Instructions)
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1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
See How To Get Tax Help, near the end of this publication for information about getting these publications and forms.
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