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1099 reporting of $3000 PSO insurance premiums

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#1 cprbcompliance


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Posted 28 November 2007 - 02:52 PM

We are setting up our 1099-R forms and are trying to figure out how to report the $3000 PSO tax deductible insurance premiums. According to information that I am looking at, there is no special reporting for qualified payments of health insurance premiums. Therefore, any premium payments should be included in the gross distribution reported in Box 1 and in the Taxable Amount reported in Box 2a. It is up to the retirees to claim any eligible exclusion on their 1040. We think that this will be too confusing for retirees and they will not know to claim the exclusion. We are trying to make things easier for our retirees by sending two 1099s. The second would include their insurance premiums. I am curious as to what other public pension plans are doing in regards to 1099 reporting of PSO insurance premiums.



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Posted 18 December 2007 - 12:44 PM

I have read publication 575 and it appears to me that the premiums would be included on the form 1099R and the retiree must then claim the exclusion. From publication 575 page 6:
"If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. The amount shown in box 2a of Form 1099R does not reflect this exclusion. Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Enter "PSO" next to the appropriate line on which you report the taxable amount."
Unless there has been some update to publication 575, it appears the 1099-R will include the Gross distribution including the insurance premiums. Is anyone aware of an exception to this?