
So, if there wasn’t enough
craziness to prove once again why I made an edit to one of my key ‘life
mantra’s’, our ‘not-so-friend’ IRS, has provided one more. First my mantra was:
“Simplicity, Flexibility and Availability”. That mantra later was changed to:
“Simplicity (complexity happens), Flexibility and Availability”. Maybe it’s
‘too’ obvious to not expect that ‘IRS’ and ‘Complexity’ are often synonyms.
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'Taxable Amount' ... same as 'Gross Distribution' |
The year 2019 is the fourth year
that we’ve utilized part of the 2006 ‘Pension Protection Act’, that is
particular to “Public Safety Officers”. (See page 18 of the 'Summary of the Pension Protection Act of 2006' and 'Distributions to Public Safety Officers). Those included within this cadre are, “Law
enforcement officer, firefighter, chaplain, or a member of a rescue squad or ambulance
crew”.
The PPA allows a member to draw
up to $3,000 from an eligible retirement plan and to be used toward medical
expenses “tax free”. For myself I use our 457. For the years 2016 and 2017 I made
distributions for both the PPA and for additional expenses. But in 2018 we I only made a draw for the $3,000 PSO distribution. So you can imagine my surprise when I looked at our
1099-R from our financial institution for all three years, and see that line 1 ‘Gross Distribution’
and line 2a ‘Taxable Amount’ are identical. So the initial obvious thought
was that our 1099-R was completed incorrectly by the company. Oh no, that would
be to easy. No, in fact this is the method in which the IRS has set this up.


Seriously, how difficult was that?
Honestly, I’m pretty sure that the IRS has been smoking something funny for much longer than it has been allowed in Oregon. Totally dude!
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Reduce '4a' by $3,000 place into '4b' and write 'PSO' to the left |
Anyway, it’s just possible that
your CPA is not aware of the above information. Please let them (and our fellow PSO's) know, make your
appropriate amendments, save some taxes and … have yourself a skinny salted caramel latte without
cream.
1 comment:
Found Chris Barfiled, CPA, today. He has further great information here: https://www.barfieldfinancial.com/new-blog/public-safety-officer-deduction-explained
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