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Publication 721 2003 Tax Year

Publication 721
Introductory Material

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Important Change

Catch-up contributions to Thrift Savings Plan (TSP). Beginning in 2003, participants in the TSP who are age 50 or over at the end of the year generally will be able to make catch-up contributions to the plan. For 2003 the maximum catch-up contribution is $2,000. For 2004 the maximum is increased to $3,000.

Important Reminders

Rollovers. You can roll over certain amounts from the CSRS, the FERS, or the 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.

Rollover by surviving spouse. You may be able to roll over a distribution you receive as the surviving spouse of a deceased employee into a qualified retirement plan or a traditional IRA. See Rollover Rules in Part II.

Benefits for public safety officer's survivors. 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 regardless of the date of the officer's death. Survivor benefits received before 2002 were excludable only if the officer died after 1996. For more information, see Dependents of public safety officers in Part IV.

Uniformed services Thrift Savings Plan (TSP) accounts. 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 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. 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 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).

Tax rules for annuity benefits.

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 are 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.

Thrift Savings Plan.

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.

Comments and suggestions.

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Internal Revenue Service
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Useful Items - 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
  • 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.

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