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Thread: FERs Retirees, anyone?

  1. #133

    Default Re: FERs Retirees, anyone?

    Quote Originally Posted by Stoplight View Post
    MC,

    Hmmmm...now that, there is an INTERESTING post ! On one hand, that kinda makes sense...

    OTOH, I've NEVER seen anything that indicates that to be true ! In my personal case : the OPM 1099 indicates the gross distribution amount, and that includes the SRS. The taxable amount box includes the deduction for the pension contribution spread over 30 years, as discussed above. Nowhere do you have your SRS broken out, too, except in your original OPM booklet on how they calculated your payment !

    How, and where, would you claim it on your tax return ? It's not on any tax form you get from OPM or Social Security ?? If you got some links to that info, I'm "all ears" !!! That WOULD be worth a couple of hundred bucks a year....

    Thanks !


    Stoplight...
    The only place to report gross and taxable pension is in the first section of the 1040. On the left is box for gross and then on the line to the right that adds to your income is where you place number for portion that is taxable. So you compute that on your own and plug it in. Maybe might feel better if you put words "includes SRS" next to gross figure.
    Don't take my comments as trading advice /IFT: 2-13-24=100G/https://www.theepochtimes.com/ & http://www.ewg.org/PermaCharts@p430#5159/strategy#4918p.410

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  3. #134

    Default Re: FERs Retirees, anyone?

    Quote Originally Posted by Stoplight View Post
    MC,

    Hmmmm...now that, there is an INTERESTING post ! On one hand, that kinda makes sense...

    OTOH, I've NEVER seen anything that indicates that to be true !

    How, and where, would you claim it on your tax return ? It's not on any tax form you get from OPM or Social Security ?? If you got some links to that info, I'm "all ears" !!! That WOULD be worth a couple of hundred bucks a year....

    Thanks !


    Stoplight...
    Hi SL, it's very true. I 'll let you know how to do it (taxation part) as soon as I retire...LOL..

    Taxes and FERS, SRS annuities
    BY REG JONES ON JULY 9, 2010 FERS ANNUITY COMPUTATION, RETIREMENT, SPECIAL RETIREMENT SUPPLEMENT
    Q: Are the Federal Employees Retirement System and special retirement supplement annuities subject to federal income tax? If they are, and your FERS annuity is greater than $15,000, will the special retirement supplement be reduced?
    A: The special retirement supplement is subject to federal (and, where applicable, state) taxes. However, your special retirement supplement would only be reduced if you had earnings from wages or self-employment. The Social Security earnings test doesn’t count other sources of income, such as annuities.
    Last edited by Maricar19; 02-26-2015 at 05:24 PM.
    Emotions should never play a role in one's investing strategy!
    No to Greed...No to Fear!
    http://share.robinhood.com/mariloc1

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  5. #135

    Default Re: FERs Retirees, anyone?

    Can somebody please concur with me on the scenario below?

    Spouse is at MRA (57) with 32 years of creditable service.
    The 32 years include 10 years of military buy back.

    Conclusions:
    1. The 32 years of service entitles spouse to FERS supplement until age 62, but
    2. Amount of FERS supplement($) will be based on 22 years of postal service only.

    I am getting confused!
    Emotions should never play a role in one's investing strategy!
    No to Greed...No to Fear!
    http://share.robinhood.com/mariloc1


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  7. #136

    Default

    Sounds right. Spouse has to have bought back the military time prior to retirement?

    Special supplement is based on FERs creditable service, military time bought back only applies to the FEES retirement calculation.

    Divide 22 by 40 and then use that percentage and multiply it to what the age 62 social security benefit will be. That's not exactly how it's done but will be close to what the special supplement will end up being.

    The MRA +10 eligibility qualifies for the special supplement, not the 32 years of service.

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  9. #137

    Default Re: FERs Retirees, anyone?

    Never mind. Links not working.
    Don't take my comments as trading advice /IFT: 2-13-24=100G/https://www.theepochtimes.com/ & http://www.ewg.org/PermaCharts@p430#5159/strategy#4918p.410

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  11. #138

    Default Re: FERs Retirees, anyone?

    Quote Originally Posted by Maricar19 View Post

    I am getting confused!
    That's because you're in postal management. Sorry, couldn't resist. (jk)

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  13. #139

    Default Re: FERs Retirees, anyone?

    Quote Originally Posted by Maricar19 View Post
    Hi SL, it's very true. I 'll let you know how to do it (taxation part) as soon as I retire...LOL..

    Taxes and FERS, SRS annuities
    BY REG JONES ON JULY 9, 2010 FERS ANNUITY COMPUTATION, RETIREMENT, SPECIAL RETIREMENT SUPPLEMENT
    Q: Are the Federal Employees Retirement System and special retirement supplement annuities subject to federal income tax? If they are, and your FERS annuity is greater than $15,000, will the special retirement supplement be reduced?
    A: The special retirement supplement is subject to federal (and, where applicable, state) taxes. However, your special retirement supplement would only be reduced if you had earnings from wages or self-employment. The Social Security earnings test doesn’t count other sources of income, such as annuities.
    Well, MC (and DBA !)....I beg to differ

    I think you misread Mr Jones' post. The SRS IS subject to the same annual earnings test, like SS (before your full SS retirement age). Thus, it CAN be reduced in your Fed paycheck, IF you earn wages, after early retirement, above the limit. Your basic FERS annuity that you receive does NOT count towards that $15,000. That has nothing to do with any sliding scale "tax exempt" benefit, like with SS...Read his first sentence again !

    BTW...OPM sends you a survey every year, asking you how much you "earned" last year.

    Here's another post I found by Mr Jones (emphasis added by me) :

    " Taxes on Social Security and special retirement supplement
    0
    By Reg Jones on July 3, 2013 PAY, Postal Service, RETIREMENT, SOCIAL SECURITY, Special retirement supplement, taxes

    Q. When I retire, I will be 59½ and will have 30 years of service at the Postal Service. I will not have any earned income from that point on. I understand federal and state taxes will be taken out of my FERS annuity and any money I take out of my Thrift Savings Plan. Will I also have Supplemental Security Income deducted from these two sources? Also will my special retirement supplement and, when I turn 62, my SSI benefit also be subject to federal and state taxes?

    A. Deductions for Social Security are only taken out of earnings from wages and self-employment, not other income. Your special retirement supplement will be treated as ordinary income and taxed accordingly. Your Social Security benefit will be taxed only to the extent that you have other substantial sources of income."

    The funny thing about the internet (or TSPTalk !) is...you can find pages and pages of discussion, supporting either side !!! "It MUST be true....I read it on the internet !" But here's a post I found that I liked the best :

    "The definative answer is that it's taxed like ordinary income. I can say this with great certainty because 1. I spend 20+ years in the IRS exam field and have knowledge of this subject 2. I'm an enrolled agent and 3. I'm retired and have been claiming this as ordinary income for 3 years now.

    Now if you claim it like SS, you will receive a CP-2000 correcting it about a year later and you will pay the additional tax plus interest and late payment penalty."

    Great discussion...HTH !

    Stoplight...
    "Too old to rock and roll...too young to die"... - I. Anderson

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  15. #140

    Default Re: FERs Retirees, anyone?

    Quote Originally Posted by konakathy View Post
    That's because you're in postal management. Sorry, couldn't resist. (jk)
    Lol, KK, that is funny....and spouse is a carrier and doesn't want to deal with this... and ouch, he he he!
    Last edited by Maricar19; 02-27-2015 at 04:28 AM.
    Emotions should never play a role in one's investing strategy!
    No to Greed...No to Fear!
    http://share.robinhood.com/mariloc1

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  17. #141

    Default Re: FERs Retirees, anyone?

    Stoplight,
    Source: The FERS Supplement - Little Known Benefit for Some FERS Federal Employees
    "..Taxes and the FERS Supplement
    Let’s say Jane’s FERS pension is $1,500 a month – or $18,000 a year. So let’s just stop right there - $20,000 of earned income + $18,000 of FERS Pension = $38,000.
    Without even considering any other aspects of Jane’s income, we know that at least 50% of her FERS Supplement will be subject to Federal Income taxes.
    And if she has additional income, perhaps money from her TSP, of more than $6,000 a year – 85% of her Supplement will be subject to Federal Income taxes..."

    Others must read the whole article to understand the excerpts here.. Stoplight and I are having some discourse as to how the taxation of FERS supplement, other than earnings test, is treated the same as SS benefits.
    Emotions should never play a role in one's investing strategy!
    No to Greed...No to Fear!
    http://share.robinhood.com/mariloc1

  18.  
  19. #142

    Default Re: FERs Retirees, anyone?

    MC,

    Yeah, I saw that article, too ! Like I said...you can find lots of official-looking info to support either side of the discussion ! I saw a LEO site that said the same thing.

    Here's my thought : A portion of your FERS Basic annuity is not taxed because we already paid tax on our contribution,,,,i.e., the CSRS payroll deduction (or whatever it's called now !). Tax on ordinary SS income is based on the reduced 85% or whatever, assuming because we also paid SS deductions on our paycheck. HOWEVER...we never “paid” in anything “extra” for the Supplement, so it makes sense to me that it is fully taxable ! Uncle Sam WILL get his cut...

    Anyway....we can agree to disagree...I'm going to stick with the IRS person's advice, and continue to report it as ordinary income...I don't want any nasty surprises from the IRS, somewhere down the road !


    Stoplight...
    "Too old to rock and roll...too young to die"... - I. Anderson

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  21. #143

    Default Re: FERs Retirees, anyone?

    SL, I agree with you that the supplement is ordinary income, no disagreement on that part.
    Emotions should never play a role in one's investing strategy!
    No to Greed...No to Fear!
    http://share.robinhood.com/mariloc1

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  23. #144

    Default Re: FERs Retirees, anyone?

    Quote Originally Posted by Maricar19 View Post
    SL, I agree with you that the supplement is ordinary income, no disagreement on that part.
    I work for the IRS and found the taxation of SRS very confusing until I did a little research. The form 1099-R is definitive. It will show you that 100% of the SRS is taxable no matter what your income is. It is not Social Security, it is a supplement to your FERS pension.

    Some of the confusion stems from the fact that the SRS is treated the same as SS for purposes of the SS earnings test. In 2014 if your wages/earnings exceed $15,480 your SRS will be reduced by 50% for every dollar above that threshold. This reduction is not a tax. Every dollar that is subtracted from a retiree’s Social Security (or SRS) check gets credited back to the same individual – with interest – in the form of higher future benefits.


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