Jump to content

Is anyone familiar with the circumstances under which payments from a


Guest PA consultant
 Share

Recommended Posts

Guest PA consultant

Is anyone familiar with the circumstances under which payments from a pension plan to a disabled retiree for a service connected disability could be considered non taxable? My understanding is that the payments must be in the nature of workers' compensation. So if service connected disability retirement is a provision under a local government's police pension plan, can payments from the plan to the disabled retiree be excluded from taxable income?

Link to comment
Share on other sites

  • 2 weeks later...
Guest Katharine Jungkind

I believe there is specific statutory authority under the Internal Revenue Code for disability benefits payable due to service related disabilities for police and fire personnel. I don't have the citation handy, but you might want to check the Code.

Link to comment
Share on other sites

I actually have an outline on this online. You can see it by clicking here.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

Link to comment
Share on other sites

Guest PA consultant

The outline that you referred me to was very helpful. One more question. If a disability pension meets the qualifications you indicated and is fully non-taxable, should the plan still issue a Form 1099-R? The 1099-R instructions say "Do not report amounts totally exempt from tax, such as workers' compensation..."

Link to comment
Share on other sites

Guest PA consultant

Can you give me an example of an irrebuttable presumption that a disability is service related?

If the local ordinance and collective bargaining agreement providing for service related disability retirement states that the benefit becomes a normal retirement benefit at normal retirement date, does it then become fully taxable, even if the amount stays the same? Corresponding state law makes no such reference.

And finally, could service related disability retirement benefits paid to non-uniformed employees also be considered non-taxable if the benefit is provided under only a local ordinance and not based on age or service?

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...