Rollovers to Roth IRAs.(p1)
Beginning in 2008, you can roll over distributions directly from the CSRS, FERS, and TSP to a Roth IRA if, for the tax year of the distribution, your modified adjusted gross income for Roth IRA purposes is not more than $100,000, and your filing status is not married filing separately. See Rollovers to Roth IRAs in Part II for more information. taxmap/pubs/p721-000.htm#en_us_publink100028858
Tax relief for the Kansas disaster area.(p1)
Special rules apply to the use of retirement funds by qualified individuals who suffered an economic loss in the Kansas disaster area as a result of the tornadoes and storms that began on May 4, 2007. For more information, see Publication 4492-A, Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes.taxmap/pubs/p721-000.htm#en_us_publink100076283
Tax relief for the Midwestern disaster areas.(p1)
Special rules apply to the use of retirement funds by qualified individuals who suffered an economic loss in the Midwestern disaster areas as a result of the severe storms, tornadoes, or flooding. For more information, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Also, see Form 8930, Qualified Disaster Recovery Assistance Retirement Plan Distributions and Repayments. taxmap/pubs/p721-000.htm#en_us_publink1000136565
Temporary waiver of required minimum distribution rules.(p2)
No minimum distribution is required from defined contribution plans (such as the Thrift Savings Plan (TSP)) or individual retirement arrangements (IRAs) for 2009. For more information on the temporary waiver of required minimum distributions, see Publication 575, Pension and Annuity Income, or Publication 590, Individual Retirement Arrangements (IRAs).taxmap/pubs/p721-000.htm#en_us_publink100028860
Hurricane tax relief.(p2)
Special rules apply to the use of retirement funds by qualified individuals who suffered an economic loss as a result of Hurricane Katrina, Rita, or Wilma. See Hurricane-Related Relief in Publication 575, for information on these special rules.taxmap/pubs/p721-000.htm#en_us_publink100028861
You can roll over certain amounts from the CSRS, FERS, or TSP, to a tax-sheltered annuity plan (403(b) plan) or a state or local government section 457 deferred compensation plan. See Rollover Rules in Part II.taxmap/pubs/p721-000.htm#en_us_publink100028862
Rollovers by surviving spouse.(p2)
You may be able to roll over a distribution you receive as the surviving spouse of a deceased employee or retiree into a qualified retirement plan or an IRA. See Rollover Rules in Part II.taxmap/pubs/p721-000.htm#en_us_publink100028863
Benefits for public safety officer's survivors.(p2)
A survivor annuity received by the spouse, former spouse, or child of a public safety officer killed in the line of duty generally will be excluded from the recipient's income. For more information, see Dependents of public safety officers in Part IV.taxmap/pubs/p721-000.htm#en_us_publink100028864
Uniformed services Thrift Savings Plan (TSP) accounts.(p2)
If you have a uniformed services TSP account, it may include contributions from combat zone pay. This pay is tax-exempt and contributions attributable to that pay are tax-exempt when they are distributed from the uniformed services TSP account. However, any earnings on those contributions are subject to tax when they are distributed. The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. If you have both a civilian and a uniformed services TSP account, you should apply the rules discussed in this publication separately to each account. You can get more information from the TSP website, www.tsp.gov
, or the TSP Service Office.
Photographs of missing children.(p2)
The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
This publication explains how the federal income tax rules apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. These benefits are paid primarily under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS).taxmap/pubs/p721-000.htm#en_us_publink100028866
Part of the annuity benefits you receive is a tax-free recovery of your contributions to the CSRS or FERS. The rest of your benefits is taxable. If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the taxable and tax-free parts. If your annuity starting date is before November 19, 1996, you generally could have chosen to use the Simplified Method or the General Rule. See Part II, Rules for Retirees. taxmap/pubs/p721-000.htm#en_us_publink100028867
The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer their employees. This plan is similar to private sector 401(k) plans. You can defer tax on part of your pay by having it contributed to your account in the plan. The contributions and earnings on them are not taxed until they are distributed to you. See Thrift Savings Plan in Part II. taxmap/pubs/p721-000.htm#en_us_publink100070783
We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual Forms and Publications Branch
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.
You can email us at *firstname.lastname@example.org
. (The asterisk must be included in the address.) Please put "Publications Comment" on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.
to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613
If you have a tax question, check the information available on www.irs.gov
or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.
You may want to see:
Publication 524 Credit for the Elderly or the Disabled 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 939 General Rule for Pensions and Annuities Form (and Instructions) CSA 1099R: Statement of Annuity Paid CSF 1099R: Statement of Survivor Annuity Paid W-4P: Withholding Certificate for Pension or Annuity Payments 1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 5329: Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts
See How To Get Tax Help near the end of this publication for information about getting publications and forms.taxmap/pubs/p721-000.htm#en_us_publink100028871
This part of the publication contains information that can apply to most recipients of civil service retirement benefits.taxmap/pubs/p721-000.htm#en_us_publink100028872
If you leave federal government service or transfer to a job not under the CSRS or FERS and you are not eligible for an immediate annuity, you can choose to receive a refund of the money in your CSRS or FERS retirement account. The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable.
If the refund includes only your contributions, none of the refund is taxable. If it includes any interest, the interest is taxable unless you roll it over directly into another qualified plan or a traditional individual retirement arrangement (IRA). If you do not have the Office of Personnel Management (OPM) transfer the interest to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. See Rollover Rules in Part II for information on how to make a rollover.
Interest is not paid on contributions to the CSRS for service after 1956 unless your service was for more than 1 year but not more than 5 years. Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund.
If you do not roll over interest included in your refund, it may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. If you separate from service before the calendar year in which you reach age 55, it may be subject to an additional 10% tax on early distributions. For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575.
A lump-sum distribution is eligible for capital gain treatment or the 10-year tax option only if the plan participant was born before January 2, 1936.
The CSRS or FERS annuity you receive is subject to federal income tax withholding, unless you choose not to have tax withheld. OPM will tell you how to make the choice. The choice for no withholding remains in effect until you change it. These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age.
If you choose not to have tax withheld, or if you do not have enough tax withheld, you may have to make estimated tax payments.
You may owe a penalty if the total of your withheld tax and estimated tax does not cover most of the tax shown on your return. Generally, you will owe the penalty for 2009 if the additional tax you must pay with your return is $1,000 or more and more than 10% of the tax to be shown on your 2009 return. For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax.
Form CSA 1099R is mailed to you by OPM each year. It will show any tax you had withheld. File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld.
You also can view and download your Form CSA 1099R by visiting the OPM website at www.servicesonline.opm.gov
. To log in, you will need your retirement CSA claim number and your personal identification number.
The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions.
To choose no withholding if you are a U.S. citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. Otherwise, OPM has to withhold tax. For example, OPM must withhold if you provide a U.S. address for a nominee, trustee, or agent (such as a bank) to whom the benefits are to be delivered, but you do not provide your own U.S. home address.
If you do not provide a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to OPM that you are not a U.S. citizen, a U.S. resident alien, or someone who left the United States to avoid tax. But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. For details, see Publication 519, U.S. Tax Guide for Aliens. taxmap/pubs/p721-000.htm#en_us_publink100028880
If you give OPM a Form W-4P-A, Election of Federal Income Tax Withholding, you can choose not to have tax withheld or you can choose to have tax withheld. The amount of tax withheld depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances.
To change the amount of tax withholding or to stop withholding, call OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D.C. calling area must call 202-606-0500), or call Annuitant Express at 1-800-409-6528. No special form is needed. You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. If you have TTY/TDD equipment, call 1-800-878-5707. If you need a PIN, call OPM's Retirement Information Office.
You also can change the amount of withholding or stop withholding online by visiting the OPM website at www.servicesonline.opm.gov
. You will need your retirement CSA or CSF claim number and your PIN.
If you leave the federal government before becoming eligible to retire and you apply for a refund of your CSRS or FERS contributions, or you die without leaving a survivor eligible for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any interest payable. Tax will be withheld at a 20% rate on the interest distributed. However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estimated taxes. See Rollover Rules in Part II. If you receive only your contributions, no tax will be withheld. taxmap/pubs/p721-000.htm#en_us_publink100028884
Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. The amount withheld is:
- 20% if the distribution is an eligible rollover distribution, or
- 10% if it is a nonperiodic distribution other than an eligible rollover distribution, or
- An amount determined as if you were married with three withholding allowances, unless you submit a withholding certificate (Form W-4P), if it is a periodic distribution.
However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. By January 31 after the end of the year in which you receive a distribution, the TSP will issue Form 1099-R showing the total distributions you received in the prior year and the amount of tax withheld.
For a detailed discussion of withholding on distributions from the TSP, see Important Tax Information About Payments From Your TSP Account, available from your agency personnel office or from the TSP.
The above document is also available on the TSP website at www.tsp.gov
. Select "Forms & Publications," then select "Publications," then "Tax Notices."
Generally, you must make estimated tax payments for 2009 if you expect to owe at least $1,000 in tax for 2009 (after subtracting your withholding and credits) and you expect your withholding and your credits to be less than the smaller of:
- 90% of the tax to be shown on your income tax return for 2009, or
- 100% of the tax shown on your 2008 income tax return (110% of that amount if the adjusted gross income shown on the return was more than $150,000 ($75,000 if your filing status for 2009 will be married filing separately)). The return must cover all 12 months.
You do not have to pay estimated tax for 2009 if you were a U.S. citizen or resident alien for all of 2008 and you had no tax liability for the full 12-month 2008 tax year.
Form 1040-ES contains a worksheet that you can use to help you figure your estimated tax payments. For more information, see chapter 2 in Publication 505. taxmap/pubs/p721-000.htm#en_us_publink100028887
If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally do not have to file a federal income tax return for that year. The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ.taxmap/pubs/p721-000.htm#en_us_publink100028888
If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes a survivor annuity for one or more children, each child's annuity counts as his or her own income (not yours) for federal income tax purposes.
If your child can be claimed as a dependent, treat the taxable part of his or her annuity as unearned income when applying the filing requirements for dependents. taxmap/pubs/p721-000.htm#en_us_publink100028889
Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. It will show the total amount of the annuity you received in the past year. It also should show, separately, the survivor annuity for a child or children. Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A.
If your Form CSF 1099R does not show separately the amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 1099R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099R.
You also can view and download your Form CSF 1099R by visiting the OPM website at www.servicesonline.opm.gov
. To log in you will need your retirement CSF claim number and personal identification number.
You may request a Summary of Payments, showing the amounts paid to you for your child(ren), from OPM by calling OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D.C. calling area must call 202-606-0500). You will need your CSF claim number and your social security number when you call.
To find the taxable part of a retiree's annuity when applying the filing requirements, see the discussion in Part II, Rules for Retirees, or Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled, whichever applies. To find the taxable part of each survivor annuity when applying the filing requirements, see the discussion in Part IV, Rules for Survivors of Federal Employees, or Part V, Rules for Survivors of Federal Retirees, whichever applies.