I have an OPM 1099R death benefit with "unknown" in box 2a and values in box 5 and9b. Is the taxable portion box 1-box 5?

[George4Tacks]

Best guess is to look at prior 1040s. Did the taxpayer report 100% of the 1099R as taxable. To really know you need know two things (a) date of first distribution and (b) birth date of taxpayer. Then you start reading https://www.irs.gov/publications/p575

[BobKamman]

Is this a 1099R for the decedent, or the survivor?  Had the decedent already retired and started receiving a pension?

[robinweaver]

The 1099 is to the survivor.  The decedent had not retired before death.  It is an OPM Survivor Annuity.

[BobKamman]

The truth is out there.  I find the fastest way to find it is to tell the survivor to bring in all the correspondence from OPM, and sort through it yourself.  It's easier if there were no after-tax contributions from the old days.  

[robinweaver]

Yes, it would be!

I'm wondering if I calculate the exclusion amount, then subtract BOTH the exclusion amount AND the amount in Box 5.  What do you think?

[George4Tacks]

I think you didn't do the research in the pub I referenced, nor did you fully listen to Bob. 

https://www.irs.gov/publications/p575#en_US_2020_publink1000226982

might help to getcha goin' in the right direction. 

[robinweaver]

Thank you for your help.  I looked at the publication you referenced and it clearly defined how to calculate the exclusion amount, that was very helpful.  But I didn't see the relationship of box 5 and box 9b.  I can't follow the paper trail, as Bob suggested, because the widowed taxpayer didn't keep them.  So I'm looking at two possible exclusion amounts, the one calculated using the simplified method and the one defined in Box 5.  Is there another reference that might be helpful or did I miss something in the one you listed?

[George4Tacks · Accepted solution]

The 1099R has information on it (on on an insert)

Box 5. Generally, this shows the employee’s investment in the
contract (after-tax contributions), if any, recovered tax free this year;
the portion that’s your basis in a designated Roth account; the part of
premiums paid on commercial annuities or insurance contracts
recovered tax free; the nontaxable part of a charitable gift annuity; or
the investment in a life insurance contract reportable under section
6050Y. This box doesn’t show any IRA contributions. If the amount
shown is your basis in a designated Roth account, the year you first
made contributions to that account may be entered in box 11.

Box 9b. For a life annuity from a qualified plan or from a section
403(b) plan (with after-tax contributions), an amount may be shown for
the employee’s total investment in the contract. It is used to compute
the taxable part of the distribution. See Pub. 575.

[rbynaker]

Box 5 on every OPM CSA 1099-R I've ever seen has been for health insurance premiums.

I haven't seen a taxable amount UNKNOWN for a while.  Could there have been a prior spouse entitled to some benefits?  Since they closed the "menu" of methods you could use to recover your basis (back in the 90s I think) almost all of these have the taxable amount computed.  The widow should "step into the shoes" of the retiree.

Pub 721 is to go-to for this stuff.

https://www.irs.gov/pub/irs-pdf/p721.pdf

In addition to the 1099-R each year, I also have my clients include the Notice of Annuity Adjustment.  There's at least one per year, sometimes two (or more if you change withholding mid-year).  You might find health, dental, vision, LTC insurance details there.

Rick

[robinweaver]

Thank you Rick, that was very helpful.  This is my first "unknown" with both box 5 and 9b populated.  Always good to have a challenge.