Harlan Lunsford wrote:
- quote -

I'm not using Taxwise this year (using ATX) but you must be
misinterpreting what you see. Any normal distribution from
a retirement plan is coded with a 7. As I said to Rich in
my reply to this post, Sec. 4974(c) includes defined benefit
plans because it points to Sec. 401(a).

Here is the relevant part of 401(a):

a) Requirements for qualification

A trust created or organized in the United States and
forming part of a stock bonus, pension, or profit-sharing
plan of an employer for the exclusive benefit of his
employees or their beneficiaries shall constitute a
qualified trust under this section--

(1) if contributions are made to the trust by such employer,
or employees, or both, or by another employer who is
entitled to deduct his contributions under section
404(a)(3)(B) (relating to deduction for contributions to
profit-sharing and stock bonus plans), or by a charitable
remainder trust pursuant to a qualified gratuitous transfer
(as defined in section 664(g)(1), for the purpose of
distributing to such employees or their beneficiaries the
corpus and income of the fund accumulated by the trust in
accordance with such plan;

In addition the committee reports all state that any amount
contributed is reduced by all qualified retirement plan
distributions.

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Rich Carreiro wrote:

- quote -

4974(c)(1) that references 401(a) catches defined benefit
plans.

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Rich Carreiro wrote:

- quote -

I was glad to see this year in my TaxWise (tm) software on
that form 8880 an little explanation about what types of
distributions have to be considered, and it enumerated that
those with a code 7 and NOT IRA"s do not. This would of
course include those defined benefit plan payments, since no
dollars came out of the taxpayer's pocket before taxes.

YEA!!!!

ChEAr$,
Harlan Lunsford, EA n LA
Mon 20 Feb 2006 [at] hh

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Rich Carreiro wrote:

- quote -

If she didn't get a tax benefit when she contributed to the
plans, then they are not included. Plans like 401k's,
403b's, IRA's, etc. meant you got a tax break in those
years and you must reduce your savers credit by the amount
you are now receiving.

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My mom:
* Is over 70.5.
* Is retired.
* Receives SS benefits.
* Receives a taxable contributory pension from her old
employer (which was a city in Rhode Island).
* Receives a taxable contributory pension (another defined
benefit plan) from her old union.
* Works part-time as an employee.
* Made a Roth IRA contribution in 2005.
* All her IRA assets are in a Roth IRA (and have been
since 1998).
* Has never taken a distribution from the Roth.
* Has no other retirement plans/accounts besides the
two pensions and the Roth.

Assuming her income leaves her otherwise eligible for the
saver's credit, are the pension benefits she receives
"distributions" that have to be put on line 4 of Form 8880,
and act to reduce the amount of contributions that can be
used in computing the credit?

I've looked at the Form 8880 instructions, and it lists the
kinds of distributions that have to be included. There's
nothing that obviously, explicitly would include the pension
benefits (at least to laymen). However, it does say that
you have to include distributions from "a qualified
retirement plan as defined in section 4974(c)". I did look
up that bit of the IRC and it appears to only talk various
tax-sheltered annuities.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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