Retirement Plan Consultant
Cetera Retirement Plan Specialists
Blue Ridge ESOP Associates
(Charlottesville VA / Telecommute)
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|Question 1000: I have a taxation question. My father retired in 1995 and began receiving Railroad Retirement benefits. My mother also was receiving benefits by the time my father passed away in 2011. For 2011, I spoke with an IRS representative, who instructed me to use the Simplified Method to determine the taxable amount of the Tier 2 payments. Because my father had retired at age 62, we used 240 from Table 1, pre-11/19/96, for the line 3 value. For 2012, my mother received all benefits as a widow. Should the 240 value continue to be used to determine the taxable amount, or does that value change based on my mother's age or date of beginning to receiving benefits as a widow?|
Answer: As a general rule, the amount of your late father's non-taxable Tier 2 amount continues to be used each year by your mother until the amount of tax-free Tier 2 payments to both your late father and mother exceeds the tax-free amount.
But your questions about taxation of Tier 2 benefits is beyond my expertise.I recommend that you contact IRS for specific instructions. Their toll-free number is: (800) 829-1040.
After more than 15 years, I have reached another "milestone" with the posting of the 1000th Question & Answer to this column. I want to again thank the loyal readers who continue to submit interesting questions.
The Railroad Retirement program is now more than 77 years old and has provided important retirement and survivor benefits to more than 5 million people.
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.