Taxation of Pension Benefits?

[golfgal]

I won't take this as financial advice, nor will I hold anyone responsible but does anyone know if you receive a death benefit payout from a pension how or if it is taxed? Is it taxed as regular income? I don't have specifics on the plan yet so I don't have any information about exactly what the payout is from. Just looking for initial information.

 

[Cheshire Figment]

The answer to this is: "It depends..."

If it is a return of employee contributions it is not taxable.

If it is an insurance payment it is probably not taxable.

If it is a continuation of a pension it would be taxable under the general pension rule, but the first $5,000 is not subject to tax.

The thing to do is find out in which block(s) of the Form 1099-R the payment will be reported.

Mike (CPA Retired)