Publication 575

Publication 575

A form published by the IRS explaining how the tax exempt portion of an annuity payment is calculated under the Simplified Rule, which is one of the two methods for making such calculations.
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See Tax on Excess Accumulation in Publication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.
The IRS recently released Publication 575 Pension and Annuity Income.
To determine full eligibility and make sure other requirements are met, see IRS Publication 575.
In IRS Publication 575 (which provides information to taxpayers for preparation of their 2004 federal income tax returns), the IRS states (on page 19) that a taxpayer can claim a loss on the federal income tax return upon receipt of a lump-sum distribution that is less than the contract owner's cost basis in the contract.
Thus, IRS Notice 1269, supplementing IRS Publication 575, Pensions and Annuity Income, states: "If your required beginning date is April 1, 2001 (either because you attained age 70.5 or retired in 2000), and you are taking your minimum required distribution for 2000 by April 1, 2001, do not use the new rules for figuring the distribution for 2000.
* If the distribution consists solely of employer securities (plus cash of $200 or less in lieu of fractional shares), no withholding is required; see IRS Publication 575.
If an individual can satisfy the qualified employer plan test, then he or she should turn attention to the IRS's Publication 575. The section "Tax on Early Distributions and Exceptions to Tax" reads as follows: "The 10% early distribution tax does not apply to distributions that are made to you after you separated from service with your employer if the separation occurred during or after the calendar year in which you reached age 55." This section goes on to note that this provision applies only to distributions from qualified employer plans.