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Publication 575 2008 Tax Year

Publication 575 - Introductory Material

Table of Contents

What's New for 2008

Rollovers to Roth IRAs. Beginning in 2008, you can roll over distributions directly from a qualified retirement plan 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, later, for more information.

Tax relief for the Kansas disaster area. 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 storms and tornadoes that began on May 4, 2007. For more information, see Relief for Kansas Disaster Area, later.

Tax relief for the Midwestern disaster areas. 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 severe storms, tornadoes, or flooding. For more information, see Relief for Midwestern Disaster Areas, later.

Qualified settlement income. Qualified settlement income you receive in connection with the Exxon Valdez litigation can be contributed, in whole or in part, to a qualified retirement plan. For more information, see Qualified settlement income under Rollovers, later.

What's New for 2009

Temporary waiver of required minimum distribution (RMD) rules for certain retirement plans and IRAs for 2009. No RMD is required from your employer-provided qualified retirement plan or IRA for 2009. For more information, see Temporary waiver of required minimum distributions (RMDs) for 2009, under Rollovers, later.

Reminders

Hurricane tax relief. Special rules apply to retirement funds received by qualified individuals who suffered an economic loss as a result of Hurricane Katrina, Rita, or Wilma. See Hurricane-Related Relief, for information on these special rules.

 

Photographs of missing children. 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.

Introduction

This publication discusses the tax treatment of distributions you receive from 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.

  • 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.

  • 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.

  • How to roll over certain distributions from a retirement plan into another retirement plan or IRA.

  • How to report disability payments, and how beneficiaries and survivors of employees and retirees must report benefits paid to them.

  • How to report railroad retirement benefits.

  • When additional taxes on certain distributions may apply (including the tax on early distributions and the tax on excess accumulation).

For additional information on how to report pension or annuity payments on your federal income tax return, be sure to review the instructions on the back of Copies B, C, and 2 of the Form 1099-R that you received and the instructions for Form 1040, lines 16a and 16b (Form 1040A, lines 12a and 12b or Form 1040NR, lines 17a and 17b). A “corrected” Form 1099-R replaces the corresponding original Form 1099-R if the original Form 1099-R contained an error. Make sure you use the amounts shown on the corrected Form 1099-R when reporting information on your tax return.
What is not covered in this publication?   The following topics are not discussed in this publication.

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. Although this publication will help you determine whether you can use the General Rule, it will not help you use it to determine the tax treatment of your pension or annuity income. For more information on the General Rule, see Publication 939, General Rule for Pensions and Annuities.

Individual retirement arrangements (IRAs).   Information on the tax treatment of amounts you receive from an IRA is in Publication 590, Individual Retirement Arrangements (IRAs).

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). It also covers benefits paid from the Thrift Savings Plan (TSP).

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 (575) covers the tax treatment of the non-social security equivalent benefit portion of tier 1 railroad retirement benefits, tier 2 benefits, vested dual benefits, and supplemental annuity benefits paid by the U.S. Railroad Retirement Board.

Tax-sheltered annuity plans (403(b) plans).   If you work for a public school or certain tax-exempt organizations, you may be eligible to participate in a 403(b) retirement plan offered by your employer. Although this publication covers the treatment of benefits under 403(b) plans, it does not cover other tax provisions that apply to these plans. For more information on 403(b) plans, see Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations.

Comments and suggestions.   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
SE:W:CAR:MP:T:I
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 *taxforms@irs.gov. (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.

Ordering forms and publications.   Visit www.irs.gov/formspubs 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

Tax questions.   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.

Useful Items - You may want to see:

Publication

  • 524 Credit for the Elderly or the Disabled

  • 525 Taxable and Nontaxable Income

  • 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)

  • 571 Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations

  • 590 Individual Retirement Arrangements (IRAs)

  • 721 Tax Guide to U.S. Civil Service Retirement Benefits

  • 915 Social Security and Equivalent Railroad Retirement Benefits

  • 939 General Rule for Pensions and Annuities

  • 4492 Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma

  • 4492-A Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes

  • 4492-B Information for Affected Taxpayers in the Midwestern Disaster Areas

Form (and Instructions)

  • W-4P Withholding Certificate for Pension or Annuity Payments

  • 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

  • 4972 Tax on Lump-Sum Distributions

  • 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

  • 8915 Qualified Hurricane Retirement Plan Distributions and Repayments

  • 8930 Qualified Disaster Recovery Assistance Retirement Plan Distributions and Repayments

See How To Get Tax Help near the end of this publication for information about getting publications and forms.

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