Introduction

This publication gives you the information you need to determine the tax treatment of distributions you receive from your pension and annuity plans and also shows you how to report the income on your federal income tax return. How these distributions are taxed depends on whether they are periodic payments (amounts received as an annuity) that are paid at regular intervals over several years or nonperiodic payments (amounts not received as an annuity).

What is covered in this publication? Publication 575 contains information that you need to understand the following topics:

1. How to figure the tax-free part of periodic payments under a pension or annuity plan, including using a simple worksheet for payments under a qualified plan.
2. How to figure the tax-free part of nonperiodic payments from qualified and nonqualified plans, and how to use the optional methods to figure the tax on lump-sum distributions from pension, stock bonus, and profit-sharing plans.
3. How to roll over distributions from a qualified retirement plan or IRA into another qualified retirement plan or IRA.
4. How to report disability payments, and how beneficiaries and survivors of employees and retirees must report benefits paid to them.
5. When additional taxes on certain distributions may apply (including the tax on early distributions from qualified retirement plans and IRAs and the tax on excess accumulation).

For additional information on how to report your pension or annuity payments on your federal income tax return, be sure to review the instructions on the back of Copy B of the Form 1099-R that you received and the instructions for lines 16a and 16b of Form 1040 (or lines 12a and 12b of Form 1040A).

What is not covered in this publication? The following topics are not discussed in this publication:

1. The General Rule. This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. For more information on the General Rule, see Publication 939, General Rule for Pensions and Annuities.
2. Individual retirement annuity contracts. These are annuity contracts issued by an insurance company that follow IRA rules. See Publication 590, Individual Retirement Arrangements (IRAs) (Including Roth IRAs and Education IRAs).
3. Civil service retirement benefits. If you are retired from the federal government (either regular or disability retirement) or are the survivor or beneficiary of a federal employee or retiree who died, get Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits. Publication 721 covers the tax treatment of federal retirement benefits, primarily those paid under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS).
4. Social security and equivalent tier 1 railroad retirement benefits. For information about the tax treatment of these benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. However, this publication covers the tax treatment of nonequivalent tier 1 railroad retirement benefits and tier 2 benefits.
5. Tax-sheltered annuity (TSA) plans. If you work for a public school or certain tax-exempt organizations, you may be eligible to participate in a TSA retirement plan offered by your employer. Although this publication covers the treatment of benefits under TSA plans, it does not cover other tax provisions that apply to these plans. For further information on TSAs, see Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations.

Help from IRS. You can get help from the employee plans taxpayer assistance telephone service between the hours of 1:30 p.m. and 3:30 p.m. Eastern Time, Monday through Thursday, at (202) 622-6074. (This is not a toll-free number.)

Comments and suggestions We welcome your comments about this publication and your suggestions for future editions.

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Internal Revenue Service
Technical Publications Branch
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1111 Constitution Ave. NW
Washington, DC 20224

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