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#1
08-09-2003, 01:45 AM
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 Re: Pension Buy In - quote - > > A teacher returns to a school system after a haitus and is
True, but don't make this decision based on tax consequences> > offered an opportunity to contribute cash for prior service. > > I believe actual plan is a NYS 414 plan which happens to be > > not deductible for NYS tax. Assume that payment represents > > amount previously withheld and then returned to teacher when > > service was curtailed. My logic says amount was initially > > not taxable then taxed when returned to teacher, therefore > > contribution should be deductible. > All that has happened is that the teacher has created a cost > basis in the retirement plan. When distributions start, the > teacher would use the simplified method to determine how > much of each distribution is not taxable. because there's lots more involved. First calculate the dollar amount of additional benefit that the service gives you. Then relate that to the cost to see your "return". That usually gets people's attention. <grin Next, remember that most State plans have a COLA in retirement. So use a conservative COLA to calculate the future value of both pensions - the smaller one where you did not buy service and bigger one where you did. That also is an eye opener. -HW "Skip" Weldon Columbia, SC << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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08-08-2003, 07:58 AM
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| Re: Pension Buy In Stephen Waite <lswaite[at]att.net> wrote: - quote - > A teacher returns to a school system after a haitus and is
All that has happened is that the teacher has created a cost> offered an opportunity to contribute cash for prior service. > I believe actual plan is a NYS 414 plan which happens to be > not deductible for NYS tax. Assume that payment represents > amount previously withheld and then returned to teacher when > service was curtailed. My logic says amount was initially > not taxable then taxed when returned to teacher, therefore > contribution should be deductible. basis in the retirement plan. When distributions start, the teacher would use the simplified method to determine how much of each distribution is not taxable. Alan http://taxtopics.net << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
08-08-2003, 02:39 AM
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| Pension Buy In A teacher returns to a school system after a haitus and is offered an opportunity to contribute cash for prior service. I believe actual plan is a NYS 414 plan which happens to be not deductible for NYS tax. Assume that payment represents amount previously withheld and then returned to teacher when service was curtailed. My logic says amount was initially not taxable then taxed when returned to teacher, therefore contribution should be deductible. Steve << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| buy, pension |
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