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1040a Publication 575 - Main Content Table of Contents General InformationPension. 1040a Annuity. 1040a Qualified employee plan. 1040a Qualified employee annuity. 1040a Designated Roth account. 1040a Tax-sheltered annuity plan. 1040a Fixed-period annuities. 1040a Annuities for a single life. 1040a Joint and survivor annuities. 1040a Variable annuities. 1040a Disability pensions. 1040a Variable Annuities Section 457 Deferred Compensation Plans Disability Pensions Insurance Premiums for Retired Public Safety Officers Railroad Retirement Benefits Withholding Tax and Estimated Tax Cost (Investment in the Contract)Foreign employment contributions while a nonresident alien. 1040a Taxation of Periodic PaymentsPeriod of participation. 1040a Fully Taxable Payments Partly Taxable Payments Taxation of Nonperiodic PaymentsFiguring the Taxable Amount Loans Treated as Distributions Transfers of Annuity Contracts Lump-Sum Distributions RolloversExceptions. 1040a No tax withheld. 1040a Partial rollovers. 1040a Frozen deposits. 1040a Reasonable period of time. 1040a 20% Mandatory withholding. 1040a How to report. 1040a How to report. 1040a Special rule for Roth IRAs and designated Roth accounts. 1040a Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and BeneficiariesGuaranteed payments. 1040a How To Get Tax HelpLow Income Taxpayer Clinics General Information Definitions. 1040a   Some of the terms used in this publication are defined in the following paragraphs. 1040a Pension. 1040a   A pension is generally a series of definitely determinable payments made to you after you retire from work. 1040a Pension payments are made regularly and are based on such factors as years of service and prior compensation. 1040a Annuity. 1040a   An annuity is a series of payments under a contract made at regular intervals over a period of more than one full year. 1040a They can be either fixed (under which you receive a definite amount) or variable (not fixed). 1040a You can buy the contract alone or with the help of your employer. 1040a Qualified employee plan. 1040a   A qualified employee plan is an employer's stock bonus, pension, or profit-sharing plan that is for the exclusive benefit of employees or their beneficiaries and that meets Internal Revenue Code requirements. 1040a It qualifies for special tax benefits, such as tax deferral for employer contributions and capital gain treatment or the 10-year tax option for lump-sum distributions (if participants qualify). 1040a To determine whether your plan is a qualified plan, check with your employer or the plan administrator. 1040a Qualified employee annuity. 1040a   A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. 1040a Designated Roth account. 1040a   A designated Roth account is a separate account created under a qualified Roth contribution program to which participants may elect to have part or all of their elective deferrals to a 401(k), 403(b), or 457(b) plan designated as Roth contributions. 1040a Elective deferrals that are designated as Roth contributions are included in your income. 1040a However, qualified distributions (explained later) are not included in your income. 1040a You should check with your plan administrator to determine if your plan will accept designated Roth contributions. 1040a Tax-sheltered annuity plan. 1040a   A tax-sheltered annuity plan (often referred to as a 403(b) plan or a tax-deferred annuity plan) is a retirement plan for employees of public schools and certain tax-exempt organizations. 1040a Generally, a tax-sheltered annuity plan provides retirement benefits by purchasing annuity contracts for its participants. 1040a Types of pensions and annuities. 1040a   Pensions and annuities include the following types. 1040a Fixed-period annuities. 1040a   You receive definite amounts at regular intervals for a specified length of time. 1040a Annuities for a single life. 1040a   You receive definite amounts at regular intervals for life. 1040a The payments end at death. 1040a Joint and survivor annuities. 1040a   The first annuitant receives a definite amount at regular intervals for life. 1040a After he or she dies, a second annuitant receives a definite amount at regular intervals for life. 1040a The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. 1040a Variable annuities. 1040a   You receive payments that may vary in amount for a specified length of time or for life. 1040a The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds, cost-of-living indexes, or earnings from a mutual fund. 1040a Disability pensions. 1040a   You receive disability payments because you retired on disability and have not reached minimum retirement age. 1040a More than one program. 1040a   You may receive employee plan benefits from more than one program under a single trust or plan of your employer. 1040a If you participate in more than one program, you may have to treat each as a separate pension or annuity contract, depending upon the facts in each case. 1040a Also, you may be considered to have received more than one pension or annuity. 1040a Your former employer or the plan administrator should be able to tell you if you have more than one contract. 1040a Example. 1040a Your employer set up a noncontributory profit-sharing plan for its employees. 1040a The plan provides that the amount held in the account of each participant will be paid when that participant retires. 1040a Your employer also set up a contributory defined benefit pension plan for its employees providing for the payment of a lifetime pension to each participant after retirement. 1040a The amount of any distribution from the profit-sharing plan depends on the contributions (including allocated forfeitures) made for the participant and the earnings from those contributions. 1040a Under the pension plan, however, a formula determines the amount of the pension benefits. 1040a The amount of contributions is the amount necessary to provide that pension. 1040a Each plan is a separate program and a separate contract. 1040a If you get benefits from these plans, you must account for each separately, even though the benefits from both may be included in the same check. 1040a Distributions from a designated Roth account are treated separately from other distributions from the plan. 1040a Qualified domestic relations order (QDRO). 1040a   A QDRO is a judgment, decree, or order relating to payment of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependent of a participant in a retirement plan. 1040a The QDRO must contain certain specific information, such as the name and last known mailing address of the participant and each alternate payee, and the amount or percentage of the participant's benefits to be paid to each alternate payee. 1040a A QDRO may not award an amount or form of benefit that is not available under the plan. 1040a   A spouse or former spouse who receives part of the benefits from a retirement plan under a QDRO reports the payments received as if he or she were a plan participant. 1040a The spouse or former spouse is allocated a share of the participant's cost (investment in the contract) equal to the cost times a fraction. 1040a The numerator of the fraction is the present value of the benefits payable to the spouse or former spouse. 1040a The denominator is the present value of all benefits payable to the participant. 1040a   A distribution that is paid to a child or other dependent under a QDRO is taxed to the plan participant. 1040a Variable Annuities The tax rules in this publication apply both to annuities that provide fixed payments and to annuities that provide payments that vary in amount based on investment results or other factors. 1040a For example, they apply to commercial variable annuity contracts, whether bought by an employee retirement plan for its participants or bought directly from the issuer by an individual investor. 1040a Under these contracts, the owner can generally allocate the purchase payments among several types of investment portfolios or mutual funds and the contract value is determined by the performance of those investments. 1040a The earnings are not taxed until distributed either in a withdrawal or in annuity payments. 1040a The taxable part of a distribution is treated as ordinary income. 1040a Net investment income tax. 1040a   Beginning in 2013, annuities under a nonqualified plan are included in calculating your net investment income for the net investment income tax (NIIT). 1040a For information see the Instructions for Form 8960, Net Investment Income Tax — Individuals, Estates and Trusts. 1040a For information on the tax treatment of a transfer or exchange of a variable annuity contract, see Transfers of Annuity Contracts under Taxation of Nonperiodic Payments, later. 1040a Withdrawals. 1040a   If you withdraw funds before your annuity starting date and your annuity is under a qualified retirement plan, a ratable part of the amount withdrawn is tax free. 1040a The tax-free part is based on the ratio of your cost (investment in the contract) to your account balance under the plan. 1040a   If your annuity is under a nonqualified plan (including a contract you bought directly from the issuer), the amount withdrawn is allocated first to earnings (the taxable part) and then to your cost (the tax-free part). 1040a However, if you bought your annuity contract before August 14, 1982, a different allocation applies to the investment before that date and the earnings on that investment. 1040a To the extent the amount withdrawn does not exceed that investment and earnings, it is allocated first to your cost (the tax-free part) and then to earnings (the taxable part). 1040a   If you withdraw funds (other than as an annuity) on or after your annuity starting date, the entire amount withdrawn is generally taxable. 1040a   The amount you receive in a full surrender of your annuity contract at any time is tax free to the extent of any cost that you have not previously recovered tax free. 1040a The rest is taxable. 1040a   For more information on the tax treatment of withdrawals, see Taxation of Nonperiodic Payments , later. 1040a If you withdraw funds from your annuity before you reach age 59½, also see Tax on Early Distributions under Special Additional Taxes, later. 1040a Annuity payments. 1040a   If you receive annuity payments under a variable annuity plan or contract, you recover your cost tax free under either the Simplified Method or the General Rule, as explained under Taxation of Periodic Payments , later. 1040a For a variable annuity paid under a qualified plan, you generally must use the Simplified Method. 1040a For a variable annuity paid under a nonqualified plan (including a contract you bought directly from the issuer), you must use a special computation under the General Rule. 1040a For more information, see Variable annuities in Publication 939 under Computation Under the General Rule. 1040a Death benefits. 1040a    If you receive a single-sum distribution from a variable annuity contract because of the death of the owner or annuitant, the distribution is generally taxable only to the extent it is more than the unrecovered cost of the contract. 1040a If you choose to receive an annuity, the payments are subject to tax as described above. 1040a If the contract provides a joint and survivor annuity and the primary annuitant had received annuity payments before death, you figure the tax-free part of annuity payments you receive as the survivor in the same way the primary annuitant did. 1040a See Survivors and Beneficiaries , later. 1040a Section 457 Deferred Compensation Plans If you work for a state or local government or for a tax-exempt organization, you may be able to participate in a section 457 deferred compensation plan. 1040a If your plan is an eligible plan, you are not taxed currently on pay that is deferred under the plan or on any earnings from the plan's investment of the deferred pay. 1040a You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. 1040a You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. 1040a Your 457(b) plan may have a designated Roth account option. 1040a If so, you may be able to roll over amounts to the designated Roth account or make contributions. 1040a Elective deferrals to a designated Roth account are included in your income. 1040a Qualified distributions (explained later) are not included in your income. 1040a See the Designated Roth accounts discussion under Taxation of Periodic Payments, later. 1040a This publication covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. 1040a For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525. 1040a Is your plan eligible?   To find out if your plan is an eligible plan, check with your employer. 1040a Plans that are not eligible section 457 plans include the following: Bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plans. 1040a Nonelective deferred compensation plans for nonemployees (independent contractors). 1040a Deferred compensation plans maintained by churches. 1040a Length of service award plans for bona fide volunteer firefighters and emergency medical personnel. 1040a An exception applies if the total amount paid to a volunteer exceeds $3,000 for any year of service. 1040a Disability Pensions If you retired on disability, you generally must include in income any disability pension you receive under a plan that is paid for by your employer. 1040a You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. 1040a Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. 1040a You may be entitled to a tax credit if you were permanently and totally disabled when you retired. 1040a For information on this credit, see Publication 524. 1040a Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. 1040a Report the payments on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. 1040a Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. 1040a For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. 1040a Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. 1040a The premiums can be for coverage for you, your spouse, or dependents. 1040a The distribution must be made directly from the plan to the insurance provider. 1040a You can exclude from income the smaller of the amount of the insurance premiums or $3,000. 1040a You can only make this election for amounts that would otherwise be included in your income. 1040a The amount excluded from your income cannot be used to claim a medical expense deduction. 1040a An eligible retirement plan is a governmental plan that is: a qualified trust, a section 403(a) plan, a section 403(b) annuity, or a section 457(b) plan. 1040a If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. 1040a The amount shown in box 2a of Form 1099-R does not reflect this exclusion. 1040a Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 1040a Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 1040a Enter “PSO” next to the appropriate line on which you report the taxable amount. 1040a If you are retired on disability and reporting your disability pension on line 7 of Form 1040 or Form 1040A, or line 8 of Form 1040NR, include only the taxable amount on that line and enter “PSO” and the amount excluded on the dotted line next to the applicable line. 1040a Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. 1040a These categories are treated differently for income tax purposes. 1040a The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. 1040a This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and you treat it for tax purposes like social security benefits. 1040a If you received, repaid, or had tax withheld from the SSEB portion of tier 1 benefits during 2013, you will receive Form RRB-1099, Payments by the Railroad Retirement Board (or Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, if you are a nonresident alien) from the U. 1040a S. 1040a Railroad Retirement Board (RRB). 1040a For more information about the tax treatment of the SSEB portion of tier 1 benefits and Forms RRB-1099 and RRB-1042S, see Publication 915. 1040a The second category contains the rest of the tier 1 railroad retirement benefits, called the non-social security equivalent benefit (NSSEB). 1040a It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. 1040a Treat this category of benefits, shown on Form RRB-1099-R, as an amount received from a qualified employee plan. 1040a This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. 1040a (The NSSEB and tier 2 benefits, less certain repayments, are combined into one amount called the Contributory Amount Paid on Form RRB-1099-R. 1040a ) Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. 1040a See Taxation of Periodic Payments , later, for information on how to report your benefits and how to recover the employee contributions tax free. 1040a Form RRB-1099-R is used for U. 1040a S. 1040a citizens, resident aliens, and nonresident aliens. 1040a Nonresident aliens. 1040a   A nonresident alien is an individual who is not a citizen or a resident alien of the United States. 1040a Nonresident aliens are subject to mandatory U. 1040a S. 1040a tax withholding unless exempt under a tax treaty between the United States and their country of legal residency. 1040a A tax treaty exemption may reduce or eliminate tax withholding from railroad retirement benefits. 1040a See Tax withholding next for more information. 1040a   If you are a nonresident alien and your tax withholding rate changed or your country of legal residence changed during the year, you may receive more than one Form RRB-1042S or Form RRB-1099-R. 1040a To determine your total benefits paid or repaid and total tax withheld for the year, you should add the amounts shown on all forms you received for that year. 1040a For information on filing requirements for aliens, see Publication 519, U. 1040a S. 1040a Tax Guide for Aliens. 1040a For information on tax treaties between the United States and other countries that may reduce or eliminate U. 1040a S. 1040a tax on your benefits, see Publication 901, U. 1040a S. 1040a Tax Treaties. 1040a Tax withholding. 1040a   To request or change your income tax withholding from SSEB payments, U. 1040a S. 1040a citizens should contact the IRS for Form W-4V, Voluntary Withholding Request, and file it with the RRB. 1040a To elect, revoke, or change your income tax withholding from NSSEB, tier 2, VDB, and supplemental annuity payments received, use Form RRB W-4P, Withholding Certificate for Railroad Retirement Payments. 1040a If you are a nonresident alien or a U. 1040a S. 1040a citizen living abroad, you should provide Form RRB-1001, Nonresident Questionnaire, to the RRB to furnish citizenship and residency information and to claim any treaty exemption from U. 1040a S. 1040a tax withholding. 1040a Nonresident U. 1040a S. 1040a citizens cannot elect to be exempt from withholding on payments delivered outside of the U. 1040a S. 1040a Help from the RRB. 1040a   To request an RRB form or to get help with questions about an RRB benefit, you should contact your nearest RRB field office if you reside in the United States (call 1-877-772-5772 for the nearest field office) or U. 1040a S. 1040a consulate/Embassy if you reside outside the United States. 1040a You can visit the RRB on the Internet at www. 1040a rrb. 1040a gov. 1040a Form RRB-1099-R. 1040a   The following discussion explains the items shown on Form RRB-1099-R. 1040a The amounts shown on this form are before any deduction for: Federal income tax withholding, Medicare premiums, Legal process garnishment payments, Recovery of a prior year overpayment of an NSSEB, tier 2 benefit, VDB, or supplemental annuity benefit, or Recovery of Railroad Unemployment Insurance Act benefits received while awaiting payment of your railroad retirement annuity. 1040a   The amounts shown on this form are after any offset for: Social Security benefits, Age reduction, Public Service pensions or public disability benefits, Dual railroad retirement entitlement under another RRB claim number, Work deductions, Legal process partition deductions, Actuarial adjustment, Annuity waiver, or Recovery of a current-year overpayment of NSSEB, tier 2, VDB, or supplemental annuity benefits. 1040a   The amounts shown on Form RRB-1099-R do not reflect any special rules, such as capital gain treatment or the special 10-year tax option for lump-sum payments, or tax-free rollovers. 1040a To determine if any of these rules apply to your benefits, see the discussions about them later. 1040a   Generally, amounts shown on your Form RRB-1099-R are considered a normal distribution. 1040a Use distribution code “7” if you are asked for a distribution code. 1040a Distribution codes are not shown on Form RRB-1099-R. 1040a   There are three copies of this form. 1040a Copy B is to be included with your income tax return if federal income tax is withheld. 1040a Copy C is for your own records. 1040a Copy 2 is filed with your state, city, or local income tax return, when required. 1040a See the illustrated Copy B (Form RRB-1099-R) above. 1040a       Each beneficiary will receive his or her own Form RRB-1099-R. 1040a If you receive benefits on more than one railroad retirement record, you may get more than one Form RRB-1099-R. 1040a So that you get your form timely, make sure the RRB always has your current mailing address. 1040a Please click here for the text description of the image. 1040a Form RRB-1099-R Box 1—Claim Number and Payee Code. 1040a   Your claim number is a six- or nine-digit number preceded by an alphabetical prefix. 1040a This is the number under which the RRB paid your benefits. 1040a Your payee code follows your claim number and is the last number in this box. 1040a It is used by the RRB to identify you under your claim number. 1040a In all your correspondence with the RRB, be sure to use the claim number and payee code shown in this box. 1040a Box 2—Recipient's Identification Number. 1040a   This is the recipient's U. 1040a S. 1040a taxpayer identification number. 1040a It is the social security number (SSN), individual taxpayer identification number (ITIN), or employer identification number (EIN), if known, for the person or estate listed as the recipient. 1040a If you are a resident or nonresident alien who must furnish a taxpayer identification number to the IRS and are not eligible to obtain an SSN, use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN. 1040a The Instructions for Form W-7 explain how and when to apply. 1040a Box 3—Employee Contributions. 1040a   This is the amount of taxes withheld from the railroad employee's earnings that exceeds the amount of taxes that would have been withheld had the earnings been covered under the social security system. 1040a This amount is the employee's cost that you use to figure the tax-free part of the NSSEB and tier 2 benefit you received (the amount shown in box 4). 1040a (For information on how to figure the tax-free part, see Partly Taxable Payments under Taxation of Periodic Payments, later. 1040a ) The amount shown is the total employee contribution amount, not reduced by any amounts that the RRB calculated as previously recovered. 1040a It is the latest amount reported for 2013 and may have increased or decreased from a previous Form RRB-1099-R. 1040a If this amount has changed, the change is retroactive. 1040a You may need to refigure the tax-free part of your NSSEB/tier 2 benefit for 2013 and prior tax years. 1040a If this box is blank, it means that the amount of your NSSEB and tier 2 payments shown in box 4 is fully taxable. 1040a    If you had a previous annuity entitlement that ended and you are figuring the tax-free part of your NSSEB/tier 2 benefit for your current annuity entitlement, you should contact the RRB for confirmation of your correct employee contribution amount. 1040a Box 4—Contributory Amount Paid. 1040a   This is the gross amount of the NSSEB and tier 2 benefit you received in 2013, less any 2013 benefits you repaid in 2013. 1040a (Any benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. 1040a ) This amount is the total contributory pension paid in 2013. 1040a It may be partly taxable and partly tax free or fully taxable. 1040a If you determine you are eligible to compute a tax-free part as explained later in Partly Taxable Payments under Taxation of Periodic Payments, use the latest reported employee contribution amount shown in box 3 as the cost. 1040a Box 5—Vested Dual Benefit. 1040a   This is the gross amount of vested dual benefit (VDB) payments paid in 2013, less any 2013 VDB payments you repaid in 2013. 1040a It is fully taxable. 1040a VDB payments you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. 1040a Note. 1040a The amounts shown in boxes 4 and 5 may represent payments for 2013 and/or other years after 1983. 1040a Box 6—Supplemental Annuity. 1040a   This is the gross amount of supplemental annuity benefits paid in 2013, less any 2013 supplemental annuity benefits you repaid in 2013. 1040a It is fully taxable. 1040a Supplemental annuity benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. 1040a Box 7—Total Gross Paid. 1040a   This is the sum of boxes 4, 5, and 6. 1040a The amount represents the total pension paid in 2013. 1040a Include this amount on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 1040a Box 8—Repayments. 1040a   This amount represents any NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit you repaid to the RRB in 2013 for years before 2013 or for unknown years. 1040a The amount shown in this box has not been deducted from the amounts shown in boxes 4, 5, and 6. 1040a It only includes repayments of benefits that were taxable to you. 1040a This means it only includes repayments in 2013 of NSSEB benefits paid after 1985, tier 2 and VDB benefits paid after 1983, and supplemental annuity benefits paid in any year. 1040a If you included the benefits in your income in the year you received them, you may be able to deduct the repaid amount. 1040a For more information about repayments, see Repayment of benefits received in an earlier year , later. 1040a    You may have repaid an overpayment of benefits by returning a payment, by making a payment, or by having an amount withheld from your railroad retirement annuity payment. 1040a Box 9—Federal Income Tax Withheld. 1040a   This is the total federal income tax withheld from your NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit. 1040a Include this on your income tax return as tax withheld. 1040a If you are a nonresident alien and your tax withholding rate and/or country of legal residence changed during 2013, you will receive more than one Form RRB-1099-R for 2013. 1040a Determine the total amount of U. 1040a S. 1040a federal income tax withheld from your 2013 RRB NSSEB, tier 2, VDB, and supplemental annuity payments by adding the amounts in box 9 of all original 2013 Forms RRB-1099-R, or the latest corrected or duplicate Forms RRB-1099-R you receive. 1040a Box 10—Rate of Tax. 1040a   If you are taxed as a U. 1040a S. 1040a citizen or resident alien, this box does not apply to you. 1040a If you are a nonresident alien, an entry in this box indicates the rate at which tax was withheld on the NSSEB, tier 2, VDB, and supplemental annuity payments that were paid to you in 2013. 1040a If you are a nonresident alien whose tax was withheld at more than one rate during 2013, you will receive a separate Form RRB-1099-R for each rate change during 2013. 1040a Box 11—Country. 1040a   If you are taxed as a U. 1040a S. 1040a citizen or resident alien, this box does not apply to you. 1040a If you are a nonresident alien, an entry in this box indicates the country of which you were a resident for tax purposes at the time you received railroad retirement payments in 2013. 1040a If you are a nonresident alien who was a resident of more than one country during 2013, you will receive a separate Form RRB-1099-R for each country of residence during 2013. 1040a Box 12—Medicare Premium Total. 1040a   This is for information purposes only. 1040a The amount shown in this box represents the total amount of Part B Medicare premiums deducted from your railroad retirement annuity payments in 2013. 1040a Medicare premium refunds are not included in the Medicare total. 1040a The Medicare total is normally shown on Form RRB-1099 (if you are a citizen or resident alien of the United States) or Form RRB-1042S (if you are a nonresident alien). 1040a However, if Form RRB-1099 or Form RRB-1042S is not required for 2013, then this total will be shown on Form RRB-1099-R. 1040a If your Medicare premiums were deducted from your social security benefits, paid by a third party, refunded to you, and/or you paid the premiums by direct billing, your Medicare total will not be shown in this box. 1040a Repayment of benefits received in an earlier year. 1040a   If you had to repay any railroad retirement benefits that you had included in your income in an earlier year because at that time you thought you had an unrestricted right to it, you can deduct the amount you repaid in the year in which you repaid it. 1040a   If you repaid $3,000 or less in 2013, deduct it on Schedule A (Form 1040), line 23. 1040a The 2%-of-adjusted-gross-income limit applies to this deduction. 1040a You cannot take this deduction if you file Form 1040A. 1040a    If you repaid more than $3,000 in 2013, you can either take a deduction for the amount repaid on Schedule A (Form 1040), line 28 or you can take a credit against your tax. 1040a For more information, see Repayments in Publication 525. 1040a Withholding Tax and Estimated Tax Your retirement plan distributions are subject to federal income tax withholding. 1040a However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. 1040a (These are distributions, described later under Rollovers, that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. 1040a ) If you choose not to have tax withheld or if you do not have enough tax withheld, you may have to make estimated tax payments. 1040a See Estimated tax , later. 1040a The withholding rules apply to the taxable part of payments you receive from: An employer pension, annuity, profit-sharing, or stock bonus plan, Any other deferred compensation plan, A traditional individual retirement arrangement (IRA), or A commercial annuity. 1040a For this purpose, a commercial annuity means an annuity, endowment, or life insurance contract issued by an insurance company. 1040a There will be no withholding on any part of a distribution where it is reasonable to believe that it will not be includible in gross income. 1040a Choosing no withholding. 1040a   You can choose not to have income tax withheld from retirement plan payments unless they are eligible rollover distributions. 1040a You can make this choice on Form W-4P for periodic and nonperiodic payments. 1040a This choice generally remains in effect until you revoke it. 1040a   The payer will ignore your choice not to have tax withheld if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer, before the payment is made, that you gave an incorrect social security number. 1040a   To choose not to have tax withheld, a U. 1040a S. 1040a citizen or resident alien must give the payer a home address in the United States or its possessions. 1040a Without that address, the payer must withhold tax. 1040a For example, the payer has to withhold tax if the recipient has provided a U. 1040a S. 1040a address for a nominee, trustee, or agent to whom the benefits are delivered, but has not provided his or her own U. 1040a S. 1040a home address. 1040a   If you do not give the payer a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to the payer that you are not a U. 1040a S. 1040a citizen, a U. 1040a S. 1040a resident alien, or someone who left the country to avoid tax. 1040a But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. 1040a This 30% rate will not apply if you are exempt or subject to a reduced rate by treaty. 1040a For details, get Publication 519. 1040a Periodic payments. 1040a   Unless you choose no withholding, your annuity or similar periodic payments (other than eligible rollover distributions) will be treated like wages for withholding purposes. 1040a Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). 1040a You should give the payer a completed withholding certificate (Form W-4P or a similar form provided by the payer). 1040a If you do not, tax will be withheld as if you were married and claiming three withholding allowances. 1040a   Tax will be withheld as if you were single and were claiming no withholding allowances if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer (before any payment is made) that you gave an incorrect social security number. 1040a   You must file a new withholding certificate to change the amount of withholding. 1040a Nonperiodic distributions. 1040a    Unless you choose no withholding, the withholding rate for a nonperiodic distribution (a payment other than a periodic payment) that is not an eligible rollover distribution is 10% of the distribution. 1040a You can also ask the payer to withhold an additional amount using Form W-4P. 1040a The part of any loan treated as a distribution (except an offset amount to repay the loan), explained later, is subject to withholding under this rule. 1040a Eligible rollover distribution. 1040a    If you receive an eligible rollover distribution, 20% of it generally will be withheld for income tax. 1040a You cannot choose not to have tax withheld from an eligible rollover distribution. 1040a However, tax will not be withheld if you have the plan administrator pay the eligible rollover distribution directly to another qualified plan or an IRA in a direct rollover. 1040a For more information about eligible rollover distributions, see Rollovers , later. 1040a Estimated tax. 1040a   Your estimated tax is the total of your expected income tax, self-employment tax, and certain other taxes for the year, minus your expected credits and withheld tax. 1040a Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax (after subtracting your withholding and credits) and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 return, or 100% of the tax shown on your 2013 return. 1040a If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. 1040a For more information, get Publication 505, Tax Withholding and Estimated Tax. 1040a In figuring your withholding or estimated tax, remember that a part of your monthly social security or equivalent tier 1 railroad retirement benefits may be taxable. 1040a See Publication 915. 1040a You can choose to have income tax withheld from those benefits. 1040a Use Form W-4V to make this choice. 1040a Cost (Investment in the Contract) Distributions from your pension or annuity plan may include amounts treated as a recovery of your cost (investment in the contract). 1040a If any part of a distribution is treated as a recovery of your cost under the rules explained in this publication, that part is tax free. 1040a Therefore, the first step in figuring how much of a distribution is taxable is to determine the cost of your pension or annuity. 1040a In general, your cost is your net investment in the contract as of the annuity starting date (or the date of the distribution, if earlier). 1040a To find this amount, you must first figure the total premiums, contributions, or other amounts you paid. 1040a This includes the amounts your employer contributed that were taxable to you when paid. 1040a (However, see Foreign employment contributions , later. 1040a ) It does not include amounts withheld from your pay on a tax-deferred basis (money that was taken out of your gross pay before taxes were deducted). 1040a It also does not include amounts you contributed for health and accident benefits (including any additional premiums paid for double indemnity or disability benefits). 1040a From this total cost you must subtract the following amounts. 1040a Any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income and that you received by the later of the annuity starting date or the date on which you received your first payment. 1040a Any other tax-free amounts you received under the contract or plan by the later of the dates in (1). 1040a If you must use the Simplified Method for your annuity payments, the tax-free part of any single-sum payment received in connection with the start of the annuity payments, regardless of when you received it. 1040a (See Simplified Method , later, for information on its required use. 1040a ) If you use the General Rule for your annuity payments, the value of the refund feature in your annuity contract. 1040a (See General Rule , later, for information on its use. 1040a ) Your annuity contract has a refund feature if the annuity payments are for your life (or the lives of you and your survivor) and payments in the nature of a refund of the annuity's cost will be made to your beneficiary or estate if all annuitants die before a stated amount or a stated number of payments are made. 1040a For more information, see Publication 939. 1040a The tax treatment of the items described in (1) through (3) is discussed later under Taxation of Nonperiodic Payments . 1040a Form 1099-R. 1040a If you began receiving periodic payments of a life annuity in 2013, the payer should show your total contributions to the plan in box 9b of your 2013 Form 1099-R. 1040a Annuity starting date defined. 1040a   Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed. 1040a Example. 1040a On January 1, you completed all your payments required under an annuity contract providing for monthly payments starting on August 1 for the period beginning July 1. 1040a The annuity starting date is July 1. 1040a This is the date you use in figuring the cost of the contract and selecting the appropriate number from Table 1 for line 3 of the Simplified Method Worksheet. 1040a Designated Roth accounts. 1040a   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. 1040a Your cost will also include any in-plan Roth rollovers you included in income. 1040a Foreign employment contributions. 1040a   If you worked abroad, your cost may include contributions by your employer to the retirement plan, but only if those contributions would be excludible from your gross income had they been paid directly to you as compensation. 1040a The contributions that apply are: Contributions before 1963 by your employer, Contributions after 1962 by your employer if the contributions would be excludible from your gross income (not including the foreign earned income exclusion) had they been paid directly to you, or Contributions after 1996 by your employer if you performed the services of a foreign missionary (a duly ordained, commissioned, or licensed minister of a church or a lay person) but only if the contributions would be excludible from your gross income had they been paid directly to you. 1040a Foreign employment contributions while a nonresident alien. 1040a   In determining your cost, special rules apply if you are a U. 1040a S. 1040a citizen or resident alien who received distributions in 2013 from a plan to which contributions were made while you were a nonresident alien. 1040a Your contributions and your employer's contributions are not included in your cost if the contribution: Was made based on compensation which was for services performed outside the United States while you were a nonresident alien, and Was not subject to income tax under the laws of the United States or any foreign country, but only if the contribution would have been subject to income tax if paid as cash compensation when the services were performed. 1040a Taxation of Periodic Payments This section explains how the periodic payments you receive from a pension or annuity plan are taxed. 1040a Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). 1040a These payments are also known as amounts received as an annuity. 1040a If you receive an amount from your plan that is not a periodic payment, see Taxation of Nonperiodic Payments , later. 1040a In general, you can recover the cost of your pension or annuity tax free over the period you are to receive the payments. 1040a The amount of each payment that is more than the part that represents your cost is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). 1040a Designated Roth accounts. 1040a   If you receive a qualified distribution from a designated Roth account, the distribution is not included in your gross income. 1040a This applies to both your cost in the account and income earned on that account. 1040a A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. 1040a   If the distribution is not a qualified distribution, the rules discussed in this section apply. 1040a The designated Roth account is treated as a separate contract. 1040a Period of participation. 1040a   The 5-tax-year period of participation is the 5-tax-year period beginning with the first tax year for which the participant made a designated Roth contribution to the plan. 1040a Therefore, for designated Roth contributions made for 2013, the first year for which a qualified distribution can be made is 2018. 1040a   However, if a direct rollover is made to the plan from a designated Roth account under another plan, the 5-tax-year period for the recipient plan begins with the first tax year for which the participant first had designated Roth contributions made to the other plan. 1040a   Your 401(k), 403(b), or 457(b) plan may permit you to roll over amounts from those plans to a designated Roth account within the same plan. 1040a This is known as an in-plan Roth rollover. 1040a For more details, see In-plan Roth rollovers , later. 1040a Fully Taxable Payments The pension or annuity payments that you receive are fully taxable if you have no cost in the contract because any of the following situations applies to you (however, see Insurance Premiums for Retired Public Safety Officers , earlier). 1040a You did not pay anything or are not considered to have paid anything for your pension or annuity. 1040a Amounts withheld from your pay on a tax-deferred basis are not considered part of the cost of the pension or annuity payment. 1040a Your employer did not withhold contributions from your salary. 1040a You got back all of your contributions tax free in prior years (however, see Exclusion not limited to cost under Partly Taxable Payments, later). 1040a Report the total amount you got on Form 1040, line 16b; Form 1040A, line 12b; or on Form 1040NR, line 17b. 1040a You should make no entry on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 1040a Deductible voluntary employee contributions. 1040a   Distributions you receive that are based on your accumulated deductible voluntary employee contributions are generally fully taxable in the year distributed to you. 1040a Accumulated deductible voluntary employee contributions include net earnings on the contributions. 1040a If distributed as part of a lump sum, they do not qualify for the 10-year tax option or capital gain treatment, explained later. 1040a Partly Taxable Payments If you have a cost to recover from your pension or annuity plan (see Cost (Investment in the Contract) , earlier), you can exclude part of each annuity payment from income as a recovery of your cost. 1040a This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. 1040a The rest of each payment is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). 1040a You figure the tax-free part of the payment using one of the following methods. 1040a Simplified Method. 1040a You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). 1040a You cannot use this method if your annuity is paid under a nonqualified plan. 1040a General Rule. 1040a You must use this method if your annuity is paid under a nonqualified plan. 1040a You generally cannot use this method if your annuity is paid under a qualified plan. 1040a You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. 1040a If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. 1040a Qualified plan annuity starting before November 19, 1996. 1040a   If your annuity is paid under a qualified plan and your annuity starting date (defined earlier under Cost (Investment in the Contract) ) is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the Simplified Method or the General Rule. 1040a If your annuity starting date is before July 2, 1986, you use the General Rule unless your annuity qualified for the Three-Year Rule. 1040a If you used the Three-Year Rule (which was repealed for annuities starting after July 1, 1986), your annuity payments are generally now fully taxable. 1040a Exclusion limit. 1040a   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. 1040a Once your annuity starting date is determined, it does not change. 1040a If you calculate the taxable portion of your annuity payments using the simplified method worksheet, the annuity starting date determines the recovery period for your cost. 1040a That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. 1040a Exclusion limited to cost. 1040a   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a recovery of the cost cannot exceed your total cost. 1040a Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. 1040a This deduction is not subject to the 2%-of-adjusted-gross-income limit. 1040a Example 1. 1040a Your annuity starting date is after 1986, and you exclude $100 a month ($1,200 a year) under the Simplified Method. 1040a The total cost of your annuity is $12,000. 1040a Your exclusion ends when you have recovered your cost tax free, that is, after 10 years (120 months). 1040a After that, your annuity payments are generally fully taxable. 1040a Example 2. 1040a The facts are the same as in Example 1, except you die (with no surviving annuitant) after the eighth year of retirement. 1040a You have recovered tax free only $9,600 (8 × $1,200) of your cost. 1040a An itemized deduction for your unrecovered cost of $2,400 ($12,000 – $9,600) can be taken on your final return. 1040a Exclusion not limited to cost. 1040a   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. 1040a If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. 1040a The total exclusion may be more than your cost. 1040a Simplified Method Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. 1040a For an annuity that is payable for the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. 1040a For any other annuity, this number is the number of monthly annuity payments under the contract. 1040a Who must use the Simplified Method. 1040a   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you meet both of the following conditions. 1040a You receive your pension or annuity payments from any of the following plans. 1040a A qualified employee plan. 1040a A qualified employee annuity. 1040a A tax-sheltered annuity plan (403(b) plan). 1040a On your annuity starting date, at least one of the following conditions applies to you. 1040a You are under age 75. 1040a You are entitled to less than 5 years of guaranteed payments. 1040a Guaranteed payments. 1040a   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. 1040a If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. 1040a Annuity starting before November 19, 1996. 1040a   If your annuity starting date is after July 1, 1986, and before November 19, 1996, and you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. 1040a You could have chosen to use the Simplified Method if your annuity is payable for your life (or the lives of you and your survivor annuitant) and you met both of the conditions listed earlier under Who must use the Simplified Method . 1040a Who cannot use the Simplified Method. 1040a   You cannot use the Simplified Method if you receive your pension or annuity from a nonqualified plan or otherwise do not meet the conditions described in the preceding discussion. 1040a See General Rule , later. 1040a How to use the Simplified Method. 1040a    Complete Worksheet A in the back of this publication to figure your taxable annuity for 2013. 1040a Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. 1040a   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. 1040a How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. 1040a For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. 1040a    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. 1040a Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. 1040a Single-life annuity. 1040a   If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. 1040a Enter on line 3 the number shown for your age on your annuity starting date. 1040a This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 1040a Multiple-lives annuity. 1040a   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. 1040a Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. 1040a For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. 1040a For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. 1040a Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. 1040a   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. 1040a Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. 1040a This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 1040a Fixed-period annuity. 1040a   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. 1040a Line 6. 1040a   The amount on line 6 should include all amounts that could have been recovered in prior years. 1040a If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. 1040a Example. 1040a Bill Smith, age 65, began receiving retirement benefits in 2013 under a joint and survivor annuity. 1040a Bill's annuity starting date is January 1, 2013. 1040a The benefits are to be paid for the joint lives of Bill and his wife, Kathy, age 65. 1040a Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. 1040a Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. 1040a Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. 1040a Because his annuity is payable over the lives of more than one annuitant, he uses his and Kathy's combined ages and Table 2 at the bottom of Worksheet A in completing line 3 of the worksheet. 1040a His completed worksheet is shown later. 1040a Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. 1040a Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. 1040a The full amount of any annuity payments received after 310 payments are paid must be included in gross income. 1040a If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. 1040a This deduction is not subject to the 2%-of-adjusted-gross-income limit. 1040a Worksheet A. 1040a Simplified Method Worksheet for Bill Smith 1. 1040a Enter the total pension or annuity payments received this year. 1040a Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. 1040a $14,400 2. 1040a Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion. 1040a * See Cost (Investment in the Contract) , earlier 2. 1040a 31,000   Note. 1040a If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). 1040a Otherwise, go to line 3. 1040a     3. 1040a Enter the appropriate number from Table 1 below. 1040a But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. 1040a 310 4. 1040a Divide line 2 by the number on line 3 4. 1040a 100 5. 1040a Multiply line 4 by the number of months for which this year's payments were made. 1040a If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. 1040a Otherwise, go to line 6 5. 1040a 1,200 6. 1040a Enter any amount previously recovered tax free in years after 1986. 1040a This is the amount shown on line 10 of your worksheet for last year 6. 1040a -0- 7. 1040a Subtract line 6 from line 2 7. 1040a 31,000 8. 1040a Enter the smaller of line 5 or line 7 8. 1040a 1,200 9. 1040a Taxable amount for year. 1040a Subtract line 8 from line 1. 1040a Enter the result, but not less than zero. 1040a Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 1040a Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. 1040a If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers , earlier, before entering an amount on your tax return 9. 1040a $13,200 10. 1040a Was your annuity starting date before 1987? □ Yes. 1040a STOP. 1040a Do not complete the rest of this worksheet. 1040a  ☑ No. 1040a Add lines 6 and 8. 1040a This is the amount you have recovered tax free through 2013. 1040a You will need this number if you need to fill out this worksheet next year 10. 1040a 1,200 11. 1040a Balance of cost to be recovered. 1040a Subtract line 10 from line 2. 1040a If zero, you will not have to complete this worksheet next year. 1040a The payments you receive next year will generally be fully taxable 11. 1040a $29,800         * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. 1040a           Table 1 for Line 3 Above       AND your annuity starting date was—     IF the age at annuity starting date was. 1040a . 1040a . 1040a BEFORE November 19, 1996, enter on line 3. 1040a . 1040a . 1040a AFTER November 18, 1996, enter on line 3. 1040a . 1040a . 1040a     55 or under 300 360     56-60 260 310     61-65 240 260     66-70 170 210     71 or older 120 160     Table 2 for Line 3 Above     IF the combined ages at  annuity starting date were. 1040a . 1040a . 1040a THEN enter on line 3. 1040a . 1040a . 1040a     110 or under   410     111-120   360     121-130   310     131-140   260     141 or older   210   Multiple annuitants. 1040a   If you and one or more other annuitants receive payments at the same time, you exclude from each annuity payment a pro rata share of the monthly tax-free amount. 1040a Figure your share by taking the following steps. 1040a Complete your worksheet through line 4 to figure the monthly tax-free amount. 1040a Divide the amount of your monthly payment by the total amount of the monthly payments to all annuitants. 1040a Multiply the amount on line 4 of your worksheet by the amount figured in (2) above. 1040a The result is your share of the monthly tax-free amount. 1040a   Replace the amount on line 4 of the worksheet with the result in (3) above. 1040a Enter that amount on line 4 of your worksheet each year. 1040a General Rule Under the General Rule, you determine the tax-free part of each annuity payment based on the ratio of the cost of the contract to the total expected return. 1040a Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 1040a To figure it, you must use life expectancy (actuarial) tables prescribed by the IRS. 1040a Who must use the General Rule. 1040a   You must use the General Rule if you receive pension or annuity payments from: A nonqualified plan (such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan), or A qualified plan if you are age 75 or older on your annuity starting date and your annuity payments are guaranteed for at least 5 years. 1040a Annuity starting before November 19, 1996. 1040a   If your annuity starting date is after July 1, 1986, and before November 19, 1996, you had to use the General Rule for either circumstance just described. 1040a You also had to use it for any fixed-period annuity. 1040a If you did not have to use the General Rule, you could have chosen to use it. 1040a If your annuity starting date is before July 2, 1986, you had to use the General Rule unless you could use the Three-Year Rule. 1040a   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. 1040a Who cannot use the General Rule. 1040a   You cannot use the General Rule if you receive your pension or annuity from a qualified plan and none of the circumstances described in the preceding discussions apply to you. 1040a See Simplified Method , earlier. 1040a More information. 1040a   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. 1040a Taxation of Nonperiodic Payments This section of the publication explains how any nonperiodic distributions you receive under a pension or annuity plan are taxed. 1040a Nonperiodic distributions are also known as amounts not received as an annuity. 1040a They include all payments other than periodic payments and corrective distributions. 1040a For example, the following items are treated as nonperiodic distributions. 1040a Cash withdrawals. 1040a Distributions of current earnings (dividends) on your investment. 1040a However, do not include these distributions in your income to the extent the insurer keeps them to pay premiums or other consideration for the contract. 1040a Certain loans. 1040a See Loans Treated as Distributions , later. 1040a The value of annuity contracts transferred without full and adequate consideration. 1040a See Transfers of Annuity Contracts , later. 1040a Corrective distributions of excess plan contributions. 1040a   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. 1040a To correct an excess, your plan may distribute it to you (along with any income earned on the excess). 1040a Although the plan reports the corrective distributions on Form 1099-R, the distribution is not treated as a nonperiodic distribution from the plan. 1040a It is not subject to the allocation rules explained in the following discussion, it cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. 1040a    If your retirement plan made a corrective distribution of excess amounts (excess deferrals, excess contributions, or excess annual additions), your Form 1099-R should have the code “8,” “B,” “P,” or “E” in box 7. 1040a   For information on plan contribution limits and how to report corrective distributions of excess contributions, see Retirement Plan Contributions under Employee Compensation in Publication 525. 1040a Figuring the Taxable Amount How you figure the taxable amount of a nonperiodic distribution depends on whether it is made before the annuity starting date, or on or after the annuity starting date. 1040a If it is made before the annuity starting date, its tax treatment also depends on whether it is made under a qualified or nonqualified plan. 1040a If it is made under a nonqualified plan, its tax treatment depends on whether it fully discharges the contract, is received under certain life insurance or endowment contracts, or is allocable to an investment you made before August 14, 1982. 1040a You may be able to roll over the taxable amount of a nonperiodic distribution from a qualified retirement plan into another qualified retirement plan or a traditional IRA tax free. 1040a See Rollovers, later. 1040a If you do not make a tax-free rollover and the distribution qualifies as a lump-sum distribution, you may be able to elect an optional method of figuring the tax on the taxable amount. 1040a See Lump-Sum Distributions, later. 1040a Annuity starting date. 1040a   The annuity starting date is either the first day of the first period for which you receive an annuity payment under the contract or the date on which the obligation under the contract becomes fixed, whichever is later. 1040a Distributions of employer securities. 1040a    If you receive a distribution of employer securities from a qualified retirement plan, you may be able to defer the tax on the net unrealized appreciation (NUA) in the securities. 1040a The NUA is the net increase in the securities' value while they were in the trust. 1040a This tax deferral applies to distributions of the employer corporation's stocks, bonds, registered debentures, and debentures with interest coupons attached. 1040a   If the distribution is a lump-sum distribution, tax is deferred on all of the NUA unless you choose to include it in your income for the year of the distribution. 1040a    A lump-sum distribution for this purpose is the distribution or payment of a plan participant's entire balance (within a single tax year) from all of the employer's qualified plans of one kind (pension, profit-sharing, or stock bonus plans), but only if paid: Because of the plan participant's death, After the participant reaches age 59½, Because the participant, if an employee, separates from service, or After the participant, if a self-employed individual, becomes totally and permanently disabled. 1040a    If you choose to include NUA in your income for the year of the distribution and the participant was born before January 2, 1936, you may be able to figure the tax on the NUA using the optional methods described und
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Japan 2011 Earthquake/Tsunami – U.S. Government Information


In the United States

Environmental Monitoring

The EPA has its radiation air monitoring (RadNet) data, frequently asked questions, and other resources on http://www.epa.gov/japan2011/. Here you can:

Food Safety

The U.S. Food and Drug Administration (FDA) has deemed that based on current information, there is no risk to the U.S. food supply.

In response to the ongoing situation in Japan, the EPA has taken steps to increase the level of nationwide monitoring of milk, precipitation, drinking water, and other potential exposure routes.

  • EPA conducts radiological monitoring of milk under its RADNET program
  • The U.S. Food and Drug Administration has jurisdiction over the safety, labeling and identity of milk and milk products in interstate commerce.
  • States have jurisdiction over those facilities located within their territory.

Results from a screening sample taken March 25 from Spokane, WA detected 0.8 pCi/L of iodine-131, which is more than 5,000 times lower than the Derived Intervention Level set by the U.S. Food and Drug Administration.

  • These types of findings are to be expected in the coming days and are far below levels of public health concern, including for infants and children.
  • Iodine-131 has a very short half-life of approximately eight days, and the level detected in milk and milk products is therefore expected to drop relatively quickly.

Radiation is all around us in our daily lives, and these findings are a miniscule amount compared to what people experience every day. For example, people are exposed to low levels of radiation on round trip cross country flights, watching television, and even from construction materials.

  • The U.S. Food and Drug Administration has jurisdiction over 80 percent of the food supply, including seafood, dairy, and produce. The U.S. Department of Agriculture regulates meat, poultry, and processed egg products, while FDA regulates all other food products.
  • The U.S. Department of Agriculture has stated that Japan has not exported any beef products to the United States for nearly a year.
  • The U.S. Department of Agriculture has stated that Japan is not currently eligible to export any poultry or processed egg products to the U.S.
  • The U.S. Food and Drug Administration and Customs and Border Protection carefully screen all food products for unsafe substances, including radiological material at Ports of Entry.
  • Learn more about keeping food safe during an emergency.

Potassium Iodide (KI)

The Centers for Disease Control (CDC) does not recommend that people in the United States take potassium iodide supplements (also called KI) in response to the damaged nuclear reactors in Japan.

  • Only take KI on the advice of emergency management officials, public health officials, or your doctor.
  • There are health risks associated with taking KI.

Food, Mail, Ships, and Cargo from Japan

The U.S. Customs and Border Protection (CBP) is monitoring developments in Japan carefully and uses several types of radiation detection equipment in air and sea ports, mail facilities, and elsewhere to ensure safety.

  • CBP and the U.S. Food and Drug Administration carefully screen all food products for unsafe substances, including radiological material, at Ports of Entry.
  • All inbound travelers, baggage, and cargo are screened for radiological materials.
  • CBP employs radiation monitors at international mail facilities.

American Citizens in Japan

American Embassy in Japan

All U.S. citizens in Japan should continue to carefully monitor the situation and follow the guidance of the U.S. and Japanese governments.

Authorized Departures

The U.S. government has authorized the voluntary departure from Japan of eligible family members of U.S. government personnel assigned to the U.S. Embassy in Tokyo, the U.S. Consulate in Nagoya, the Foreign Service Institute Field School in Yokohama, and U.S. Forces Japan.

Evacuations

Travel to and from Japan

Disaster Preparedness

The tragic events in Japan remind us that disasters can strike at any time. The best way to make sure your family is taken care of when disaster strikes is to be prepared.

Additional Information

  • Earthquake in Japan – See facts from the U.S. Geological Survey about the 9.0 earthquake.
  • Earthquake Preparedness and Response – The U.S. Centers for Disease Control and Prevention provides helpful tips on how to prepare for an earthquake and what to do during a quake.
  • Earthquakes, Flooding, and Radiation – The National Institutes of Health provides information and resources about natural disasters and their effects.
  • Tsunami Health Effects – The U.S. Centers for Disease Control and Prevention describes the immediate, secondary, and long-term health effects of a tsunami.
  • Tsunami Preparedness – The Federal Emergency Management Agency explains what a tsunami is and provides guidance on what to do during a tsunami watch or warning.
  • Radiation – Read about the assistance and expertise that the U.S. Department of Energy is providing to Japanese response and recovery efforts.

The 1040a

1040a Index A Abandonments, Abandonments Annuities, Insurance Policies and Annuities Asset classification Capital, Capital Assets Noncapital, Noncapital Assets Assistance (see Tax help) Assumption of liabilities, Assumption of liabilities. 1040a , Liabilities. 1040a B Basis Adjusted, Adjusted basis. 1040a Original, Basis. 1040a Bonds, U. 1040a S. 1040a Treasury, U. 1040a S. 1040a Treasury Notes or Bonds Business, sold, Sale of a Business C Canceled Debt, Cancellation of debt. 1040a Lease, Cancellation of a lease. 1040a Real property sale, Canceling a sale of real property. 1040a Capital assets defined, Capital Assets Capital gains and losses Figuring, Long and Short Term Holding period, Holding period. 1040a Long term, Long and Short Term Short term, Long and Short Term Treatment of capital losses, Treatment of Capital Losses Casualties, Section 1231 transactions. 1040a Charitable organization Bargain sale to, Bargain sales to charity. 1040a , Bargain sale to charity. 1040a Gift to, Gift to charitable organization. 1040a Classes of assets, Classes of assets. 1040a Coal, Coal and Iron Ore Coins, Precious Metals and Stones, Stamps, and Coins Comments, Comments and suggestions. 1040a Commodities derivative financial instruments, Commodities derivative financial instrument. 1040a Condemnations, Condemnations, Section 1231 transactions. 1040a Conversion transactions, Conversion Transactions Copyrights, Copyright. 1040a , Copyrights. 1040a Covenant not to compete, Covenant not to compete. 1040a D Debt cancellation, Cancellation of debt. 1040a , Cancellation of debt. 1040a Deferred exchange, Deferred Exchange Depreciable property Real, Depreciable real property. 1040a Records, Depreciation Recapture Section 1245, Section 1245 property defined. 1040a , Like-Kind Exchanges and Involuntary Conversions Section 1250, Section 1250 property defined. 1040a Depreciation recapture Personal property, Section 1245 Property Real property, Section 1250 property defined. 1040a E Easement, Easement. 1040a Exchanges Deferred, Deferred Exchange Involuntary, Involuntary Conversions Like-kind, Like-Kind Exchanges, Like-Kind Exchanges and Involuntary Conversions Nontaxable, Nontaxable Exchanges Related persons, Related persons. 1040a U. 1040a S. 1040a Treasury notes or bonds, U. 1040a S. 1040a Treasury Notes or Bonds F Fair market value, Fair market value. 1040a Foreclosure, Foreclosures and Repossessions Form 1040 (Sch. 1040a D), Schedule D and Form 8949 1099-A, Forms 1099-A and 1099-C. 1040a , Forms 1099-A and 1099-C. 1040a 1099-B, Form 1099-B. 1040a 1099-C, Forms 1099-A and 1099-C. 1040a , Forms 1099-A and 1099-C. 1040a 1099-S, Form 1099-S. 1040a 4797, Business property. 1040a , Reporting the exchange. 1040a , Form 4797 8594, Reporting requirement. 1040a 8824, Reporting the exchange. 1040a 8949, Forms to file. 1040a , Personal-use property. 1040a , Reporting the exchange. 1040a , More information. 1040a , Timber, Introduction, Form 1099-B. 1040a , Personal-use property. 1040a , Mark-to-market election. 1040a Franchise, Franchise, Trademark, or Trade Name Free tax services, Free help with your tax return. 1040a G Gains and losses Bargain sale, Bargain Sale Business property, Ordinary or Capital Gain or Loss for Business Property Defined, Gain or Loss From Sales and Exchanges Form 4797, Form 4797 Ordinary or capital, Ordinary or Capital Gain or Loss Property changed to business or rental use, Property Changed to Business or Rental Use Property used partly for rental, Property Used Partly for Business or Rental Reporting, Reporting Gains and Losses Gifts of property, Gifts, Gift. 1040a Gold, Precious Metals and Stones, Stamps, and Coins H Hedging transactions, Hedging transaction. 1040a Help (see Tax help) Holding period, Holding period. 1040a Housing, low income, Low-income housing. 1040a , Low-Income Housing With Two or More Elements I Indirect ownership of stock, Ownership of stock or partnership interests. 1040a Information returns, Information Returns Inherited property, Inherited property. 1040a Installment sales, Installment Sales, Installment sale. 1040a Insurance policies, Insurance Policies and Annuities Intangible property, Dispositions of Intangible Property Involuntary conversion Defined, Involuntary Conversions Depreciable property, Like-Kind Exchanges and Involuntary Conversions Iron ore, Coal and Iron Ore L Land Release of restriction, Release of restriction on land. 1040a Subdivision, Subdivision of Land Lease, cancellation of, Cancellation of a lease. 1040a Liabilities, assumption, Liabilities. 1040a Like-kind exchanges Deferred, Deferred Exchange Liabilities, assumed, Assumption of liabilities. 1040a Like-class property, Like-Kind Property Like-kind property, Like-Kind Property Multiple parties, Multiple-party transactions. 1040a Multiple property, Multiple Property Exchanges Partnership interests, Partnership Interests Qualifying property, Qualifying Property Related persons, Like-Kind Exchanges Between Related Persons Low-income housing, Low-income housing. 1040a M Multiple property exchanges, Multiple Property Exchanges N Noncapital assets defined, Noncapital Assets Nontaxable exchanges Like-kind, Like-Kind Exchanges Other nontaxable exchanges, Other Nontaxable Exchanges Partially, Partially Nontaxable Exchanges Property exchanged for stock, Property Exchanged for Stock Notes, U. 1040a S. 1040a Treasury, U. 1040a S. 1040a Treasury Notes or Bonds O Ordinary or capital gain, Ordinary or Capital Gain or Loss P Partially nontaxable exchanges, Partially Nontaxable Exchanges Partnership Controlled, Controlled partnership transaction. 1040a Related persons, Related persons. 1040a , Controlled entity. 1040a Sale or exchange of interest, Partnership Interests, Partnership interests. 1040a , Partnership interests. 1040a Patents, Patents Personal property Depreciable, Like-Kind Exchanges and Involuntary Conversions Gains and losses, Personal-use property. 1040a Transfer at death, Transfers at Death Precious metals and stones, Precious Metals and Stones, Stamps, and Coins Property used partly for business or rental, Property Used Partly for Business or Rental, Part business or rental. 1040a Publications (see Tax help) Publicly traded securities, rollover of gain from, Rollover of Gain From Publicly Traded Securities R Real property Depreciable, Depreciable real property. 1040a Transfer at death, Transfers at Death Related persons, Sales and Exchanges Between Related Persons Condemned property replacement, bought from, Buying replacement property from a related person. 1040a Gain on sale of property, Sales and Exchanges Between Related Persons Like-kind exchanges between, Like-Kind Exchanges Between Related Persons List, Related persons. 1040a Loss on sale of property, Nondeductible Loss Patent transferred to, Related persons. 1040a Replacement property, Replacement property. 1040a , Replacement property to be produced. 1040a Repossession, Foreclosures and Repossessions, Repossession. 1040a Residual method, sale of business, Residual method. 1040a Rollover of gain, Rollover of Gain From Publicly Traded Securities S Sale of a business, Sale of a Business Sales Bargain, charitable organization, Bargain sales to charity. 1040a , Bargain sale to charity. 1040a Installment, Installment Sales, Installment sale. 1040a Property changed to business or rental use, Property Changed to Business or Rental Use Related persons, Sales and Exchanges Between Related Persons, Related persons. 1040a Section 1231 gains and losses, Section 1231 Gains and Losses Section 1245 property Defined, Section 1245 Property Gain, ordinary income, Gain Treated as Ordinary Income Multiple asset accounts, Multiple asset accounts. 1040a Section 1250 property Additional depreciation, Additional Depreciation Defined, Section 1250 property defined. 1040a Foreclosure, Foreclosure. 1040a Gain, ordinary income, Gain Treated as Ordinary Income Nonresidential, Nonresidential real property. 1040a Residential, Residential rental property. 1040a Section 197 intangibles, Section 197 Intangibles Severance damages, Severance damages. 1040a Silver, Precious Metals and Stones, Stamps, and Coins Small business stock, Gains on Sales of Qualified Small Business Stock Specialized small business investment company (SSBIC), rollover of gain into, Rollover of Gain From Publicly Traded Securities Stamps, Precious Metals and Stones, Stamps, and Coins Stock Capital asset, Capital Assets Controlling interest, corporation, Controlling interest in a corporation. 1040a Indirect ownership, Ownership of stock or partnership interests. 1040a Property exchanged for, Property Exchanged for Stock Publicly traded securities, Rollover of Gain From Publicly Traded Securities Small business, Gains on Sales of Qualified Small Business Stock Suggestions, Comments and suggestions. 1040a T Tax help, How To Get Tax Help Tax rates, capital gain, Capital Gains Tax Rates Thefts, Section 1231 transactions. 1040a Timber, Timber, Section 1231 transactions. 1040a Trade name, Franchise, Trademark, or Trade Name Trademark, Franchise, Trademark, or Trade Name Transfers to spouse, Transfers to Spouse U U. 1040a S. 1040a Treasury bonds, U. 1040a S. 1040a Treasury Notes or Bonds Unharvested crops, Section 1231 transactions. 1040a Prev  Up     Home   More Online Publications