Quote:
Originally Posted by mak44070
It has to do with the Simplified Method vs. the General Rule for figuring the taxable portion of a pension. Generally, the General Rule affect pensions started before Nov 18, 1996.
If you have an investment in your annuity or pension (that is, you've contributed after-tax money), not all of your pension that you receive each year would be taxable. By knowing when you started receiving the pension, the tax preparer can ascertain how much of your after tax contribution can be excluded each year, and can amend up to 3 previous years if the taxability of the pension has been reported on your tax return incorrectly.
Please see Pub 575 and Pub 939 on the IRS website for more information.
mary ann kelly
Enrolled Agent
Master Tax Advisor
H&R Block, Palm Ridge Plaza
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Glad I withdrew tax free and no penalty all my after tax contributions I made to my 401K. Think it was in the late 80s. Used the $ to buy a new car...
Now all my withdrawals will be taxable.
