FERS annuity question

[David1961]

This question is for those federal employees under FERS who have taken the voluntary early retirement. Is there a way to calculate what percentage of your pension is taxable? The retirement counselor told me that not all of the amount is taxable. I'm trying to get a ballpark figure to estimate what my 2013 taxes might be. I could probably always ask OPM, but not sure how long that would take.

[lemming]

I don't even know if this applies but it talks about pension calculations when part of it was included in your gross wages.
Tax Topics - Topic 411 Pensions – the General Rule and the Simplified Method
I highly suggest getting all the info you can from the OPM retirement folks-just don't call on Fridays these days(sequester humor). And do it before next tax season.

[W2R]

Quote:

Originally Posted by David1961 This question is for those federal employees under FERS who have taken the voluntary early retirement. Is there a way to calculate what percentage of your pension is taxable? The retirement counselor told me that not all of the amount is taxable. I'm trying to get a ballpark figure to estimate what my 2013 taxes might be. I could probably always ask OPM, but not sure how long that would take.

When you are retired, your 1099-R will tell you how much of it was taxable. But that doesn't help you for planning purposes, now. Unfortunately that is all that I know, though. Since OPM is many months behind in processing retirement applications, maybe you could do them and yourself a favor and look for the answer at www.opm.gov/retire

If nobody here comes up with anything, then maybe the www.federalsoup.com forum can guide you.

[donheff]

I'm CSRS but FERS is even more generous with respect to the amount employees contribute vs the amount they pull. So taxable has to be way up there 90%+. For ballpark estimates just figure the whole amount is taxable.

[Tadpole]

I have been retired for two complete tax years. My taxable amount of FERS pension has been a tad less than 98% both years.

[infoseeker]

Spouse has a FERS pension. He also couldn't pass up the early retirement offer last year. Just looked at his pension 1099-R. Exactly 98% was taxable......there was a snafu, however, in that only 5% of this was taxed....we need to change his W-4.

[zinger1457]

There is a worksheet in the IRS Publication 721 link below (Part II, Simplified Method, Worksheet A) that can be used to calculate the taxable amount from your FERS annuity.

Publication 721 (2012), Tax Guide to U.S. Civil Service Retirement Benefits

[Greg V]

When I got my "Blue Book" from OPM upon having my annuity finalized, it contained the monthly amount that was not subject to tax. Also, as mentioned earlier, once you're retired, your 1099R from OPM will report an adjusted amount that will take into account the tax exempt portion of your annuity.

To get planning numbers prior to retirement, OPM has a calculator at this URL

Retirement Service Credit Payment Calculator

that may do the trick. I haven't tested it out, but... Anyway, OPM references Pub 721 as well. Hope this helps.