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            Department of the Treasury                   Contents
            Internal Revenue Service
                                                         Reminders    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2
                                                         Introduction  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2
Publication 721
Cat. No. 46713C                                          Part I General Information              . . . . . . . . . . . . . . . . . . .   3
                                                         Part II Rules for Retirees              . . . . . . . . . . . . . . . . . . . . 5
                                                         Part III Rules for Disability Retirement and 
Tax Guide to
                                                           Credit for the Elderly or the Disabled . . . . . . .                          19
                                                         Part IV Rules for Survivors of Federal 
U.S. Civil                                                 Employees       . . . . . . . . . . . . . . . . . . . . . . . . . . .         20
                                                         Part V Rules for Survivors of Federal Retirees . . .                            25
Service
                                                         Worksheets A and B . . . . . . . . . . . . . . . . . . . . . . .                29
                                                         How To Get Tax Help       . . . . . . . . . . . . . . . . . . . . . . .         30
Retirement
                                                         Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       34

Benefits

For use in preparing                                     Future Developments
                                                         For  the  latest  information  about  developments  related  to 
2023 Returns                                             Pub.  721,  such  as  legislation  enacted  after  it  was 
                                                         published, go to IRS.gov/Pub721.

                                                         What’s New
                                                         Qualified  disaster  distributions.                 The  10%  additional 
                                                         tax on early distributions doesn't apply to qualified distri-
                                                         butions made in connection with federally declared disas-
                                                         ters. See Forms 8915-C, 8915-D, and 8915-F, as applica-
                                                         ble, for more details.
                                                         Distributions to terminally ill individuals.                    The 10% ad-
                                                         ditional tax on early distributions doesn't apply to distribu-
                                                         tions made to terminally ill individuals.
                                                         Increase in age for mandatory distributions.                          Individu-
                                                         als that reach age 72 on January 1, 2023, or later may de-
                                                         lay distributions until April 1 of the year following the year 
                                                         in which they turn age 73.
                                                         Expanded exception to the tax on early distributions 
                                                         from  a  governmental  plan  (including  both  govern-
                                                         mental  defined  benefit  and  governmental  defined 
                                                         contribution  plans)  for  qualified  public  safety  em-
                                                         ployees.     For  distributions  made  after  December  29, 
                                                         2022, the exception to the tax on early distributions is ex-
                                                         panded as follows:
                                                         • The definition of qualified public safety employee is 
                                                           expanded to include corrections officers and forensic 
                                                           security employees who are employees of state and 
                                                           local governments; and
                                                         • Qualified public safety employees may receive distri-
                                                           butions without the application of the additional tax 
Get forms and other information faster and easier at:      once they complete 25 years of service under the plan 
• IRS.gov (English)    • IRS.gov/Korean (한국어)              or attain age 50 (whichever is earlier).
• IRS.gov/Spanish (Español)  • IRS.gov/Russian (Pусский) 
• IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (Tiếng Việt) 

Dec 27, 2023

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See Qualified public safety employees under Tax on generally be excluded from the recipient's income. For
Early Distributions in Pub. 575, Pension and Annuity In- more information, see Dependents of public safety officers
come, for more information. in Part IV.
Uniformed services Thrift Savings Plan (TSP) ac-
counts. If you have a uniformed services TSP account, it
may include contributions from combat pay. This pay is tax
Reminders
exempt and contributions attributable to that pay are tax
Extended rollover period for qualified plan loan off- exempt when they are distributed from the uniformed serv-
sets in 2018 or later. For distributions made in tax years ices TSP account. However, any earnings on those contri-
beginning after December 31, 2017, you have until the butions are subject to tax when they are distributed. See
due date (including extensions) for your tax return for the Roth TSP balance, discussed later, to get more informa-
tax year in which the offset occurs to roll over a qualified tion about Roth contributions. The statement you receive
plan loan offset amount. For more information, see Plan from the TSP will separately state the total amount of your
loan offset under Time for making rollover in Pub. 575. distribution and the amount of your taxable distribution for
Maximum age for traditional IRA contributions. The the year. If you have both a civilian and a uniformed serv-
age restriction for contributions to a traditional IRA has ices TSP account, you should apply the rules discussed in
been eliminated. this publication separately to each account. You can get
more information from the TSP website, TSP.gov, or the
Distributions in the case of a birth or adoption of a TSP Service Office.
child. The 10% additional tax on early distributions
doesn’t apply to qualified birth or adoption distributions. Photographs of missing children. The IRS is a proud
partner with the National Center for Missing & Exploited
Phased retirement. The phased retirement program was Children® (NCMEC). Photographs of missing children se-
signed into law by the Moving Ahead for Progress in the lected by the Center may appear in this publication on pa-
21st Century Act. This program allows eligible employees ges that would otherwise be blank. You can help bring
to begin receiving annuity payments while working part these children home by looking at the photographs and
time. For more information about phased retirement, go to calling 1-800-THE-LOST (1-800-843-5678) if you recog-
OPM.gov and click on the Retirement tab and then nize a child.
Phased Retirement. For information on how the tax-free
portion (recovery of investment in the contract) of your
phased retirement benefits is figured, see Notice 2016-39,
available at IRS.gov/irb/2016-26_IRB#NOT-2016-39. Introduction
For additional guidance, see the Benefits Administra-
tion Letter 19-102, dated May 20, 2019, available at This publication explains how the federal income tax rules
OPM.gov/retirement-services/publications-forms/benefits- apply to civil service retirement benefits received by re-
administration-letters/2019/19-102.pdf. tired federal employees (including those disabled) or their
survivors. These benefits are paid primarily under the Civil
Roth Thrift Savings Plan (TSP) balance. You may be Service Retirement System (CSRS) or the Federal Em-
able to contribute to a designated Roth account through ployees' Retirement System (FERS).
the TSP known as the Roth TSP. Roth TSP contributions
are after-tax contributions, subject to the same contribu- Tax rules for annuity benefits. Part of the annuity bene-
tion limits as the traditional TSP. Qualified distributions fits you receive is a tax-free recovery of your contributions
from a Roth TSP aren't included in your income. See Thrift to the CSRS or FERS. The rest of your annuity benefits
Savings Plan in Part II for more information. are taxable. If your annuity starting date is after November
Rollovers. You can roll over certain amounts from the 18, 1996, you must use the Simplified Method to figure the
CSRS, FERS, or TSP to a qualified retirement plan or an taxable and tax-free parts. If your annuity starting date is
IRA. See Rollover Rules in Part II. before November 19, 1996, you generally could have
Rollovers by surviving spouse. You may be able to roll chosen to use the Simplified Method or the General Rule.
over a distribution you receive as the surviving spouse of a See Part II, Rules for Retirees.

deceased employee or retiree into a qualified retirement Thrift Savings Plan (TSP). The TSP provides federal
plan or an IRA. See Rollover Rules in Part II. employees with the same savings and tax benefits that
Thrift Savings Plan (TSP) beneficiary participant ac- many private employers offer their employees. This plan is
counts. If you are the spouse beneficiary of a decedent's similar to 401(k) plans offered by the private sector. You
TSP account, you have the option of leaving the death can defer tax on part of your pay by having it contributed
benefit payment in a TSP account in your own name (a to your traditional balance in the plan. The contributions
beneficiary participant account). The amounts in the ben- and earnings on them aren't taxed until they are distrib-
eficiary participant account are neither taxable nor report- uted to you. Also, the TSP offers a Roth TSP option. Con-
able until you choose to make a withdrawal, or otherwise tributions to this type of balance are after tax, and quali-
receive a distribution from the account. fied distributions from the account are tax free. See Thrift
Benefits for public safety officer's survivors. A survi- Savings Plan in Part II.
vor annuity received by the spouse, former spouse, or
child of a public safety officer killed in the line of duty will

2 Publication 721 (2023)

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Comments  and  suggestions.                                     We  welcome  your  com-
ments  about  this  publication  and  suggestions  for  future 
editions.                                                                                             Part I
You  can  send  us  comments  through                                                     IRS.gov/
                                                                                                      General Information
FormComments. Or, you can write to the Internal Revenue 
Service,  Tax  Forms  and  Publications,  1111  Constitution 
                                                                                                      This part of the publication contains information that can 
Ave. NW, IR-6526, Washington, DC 20224.
                                                                                                      apply to most recipients of civil service retirement bene-
Although  we  can’t  respond  individually  to  each  com-
                                                                                                      fits.
ment  received,  we  do  appreciate  your  feedback  and  will 
consider  your  comments  and  suggestions  as  we  revise 
our  tax  forms,  instructions,  and  publications.                                       Don’t  send Refund of Contributions
tax questions, tax returns, or payments to the above ad-
dress.                                                                                                If you leave federal government service or transfer to a job 
                                                                                                      not under the CSRS or FERS and you aren't eligible for an 
Getting answers to your tax questions.                                                    If you have immediate annuity, you can choose to receive a refund of 
a tax question not answered by this publication or the                                         How    the money in your CSRS or FERS retirement account. The 
To Get Tax Help section at the end of this publication, go                                            refund will include both regular and voluntary contributions 
to  the  IRS  Interactive  Tax  Assistant  page  at                                       IRS.gov/    you made to the fund, plus any interest payable.
Help/ITA  where  you  can  find  topics  by  using  the  search 
feature or viewing the categories listed.                                                             If  the  refund  includes  only  your  contributions,  none  of 
                                                                                                      the refund is taxable. If it includes any interest, the interest 
Getting  tax  forms,  instructions,  and  publications. 
                                                                                                      is taxable unless you roll it over directly into another quali-
Go to IRS.gov/Forms to download current and prior-year 
                                                                                                      fied plan or a traditional individual retirement arrangement 
forms, instructions, and publications.
                                                                                                      (IRA). If you don't have the Office of Personnel Manage-
Ordering tax forms, instructions, and publications.                                                   ment (OPM) transfer the interest to an IRA or other plan in 
Go to IRS.gov/OrderForms to order current forms, instruc-                                             a  direct  rollover,  tax  will  be  withheld  at  a  20%  rate.  See 
tions,  and  publications;  call  800-829-3676  to  order                                             Rollover Rules in Part II for information on how to make a 
prior-year  forms  and  instructions.  The  IRS  will  process                                        rollover.
your order for forms and publications as soon as possible. 
                                                                                                                Interest isn't paid on contributions to the CSRS for 
Don’t resubmit requests you’ve already sent us. You can 
                                                                                                      TIP       service  after  1956  unless  your  service  was  for 
get forms and publications faster online.
                                                                                                                more  than  1  year  but  not  more  than  5  years. 
                                                                                                      Therefore, many employees who withdraw their contribu-
Useful Items                                                                                          tions under the CSRS don't get interest and don't owe any 
You may want to see:                                                                                  tax on their refund.
Publication
                                                                                                      If you don't roll over interest included in your refund, it 
  524     524 Credit for the Elderly or the Disabled                                                  may qualify as a lump-sum distribution eligible for capital 
                                                                                                      gain treatment or the 10-year tax option if the plan partici-
  575     575 Pension and Annuity Income                                                              pant  was  born  before  January  2,  1936.  If  you  separate 
  590-A                      590-A Contributions to Individual Retirement                             from service before the calendar year in which you reach 
          Arrangements (IRAs)                                                                         age 55 (or before the earlier of age 50 or completing 25 
                                                                                                      years of service under the plan if you are a qualified public 
  590-B                      590-B Distributions from Individual Retirement                           safety employee), it may be subject to an additional 10% 
          Arrangements (IRAs)                                                                         tax  on  early  distributions.  For  more  information,  see 
  939     939 General Rule for Pensions and Annuities                                                 Lump-Sum Distributions and Tax on Early Distributions in 
                                                                                                      Pub. 575.
Form (and Instructions)
  CSA 1099-R                                         CSA 1099-R Statement of Annuity Paid             Tax Withholding and Estimated Tax

  CSF 1099-R                              CSF 1099-R Statement of Survivor Annuity Paid               The CSRS or FERS annuity you receive is subject to fed-
  W-4P             W-4P Withholding Certificate for Periodic Pension or                               eral  income  tax  withholding,  unless  you  choose  not  to 
          Annuity Payments                                                                            have  tax  withheld.  OPM  will  tell  you  how  to  make  the 
                                                                                                      choice. The choice for no withholding remains in effect un-
  W-4R                  W-4R Withholding Certificate for Nonperiodic                                  til you change it. These withholding rules also apply to a 
          Payments and Eligible Rollover Distributions                                                disability  annuity,  whether  received  before  or  after  mini-
  1099-R                           1099-R Distributions From Pensions, Annuities,                     mum retirement age.

          Retirement or Profit-Sharing Plans, IRAs,                                                   If you choose not to have tax withheld, or if you don't 
          Insurance Contracts, etc.                                                                   have enough tax withheld, you may have to make estima-
  5329        5329 Additional Taxes on Qualified Plans (Including                                     ted tax payments.
          IRAs) and Other Tax-Favored Accounts

Publication 721 (2023)                                                                                                                                     3

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You may owe a penalty if the total of your withheld To change the amount of withholding or stop with-
! tax and estimated tax doesn’t cover most of the holding go to the OPM website at
CAUTION tax shown on your return. Generally, you will owe servicesonline.opm.gov. You will need your retire-
the penalty for 2024 if the additional tax you must pay with ment CSA or CSF claim number and password. If you do
your return is $1,000 or more and more than 10% of the not have a password, call or write OPM’s Retirement Infor-
tax to be shown on your 2024 return. For more informa- mation Office.
tion, including exceptions to the penalty, see Pub. 505, Tax
Withholding and Estimated Tax. You can also change the amount of tax withhold-
ing or stop withholding, by calling OPM's Retire-
Form CSA 1099-R. Form CSA 1099-R is mailed to you ment Information Office at 1-888-767-6738. No
by OPM each year. It will show any tax you had withheld. special form is needed. You will need your retirement CSA
Attach a copy of Form CSA 1099-R to your tax return if or CSF claim number and your social security number
any federal income tax was withheld. when you call. If you have TTY/TDD equipment, call 711.

You can also view and download your Form CSA
Withholding from certain lump-sum payments. If you
1099-R by visiting the OPM website at
leave the federal government before becoming eligible to
servicesonline.opm.gov. To log in, you will need
retire and you apply for a refund of your CSRS or FERS
your retirement CSA claim number, your social security
contributions, or you die without leaving a survivor eligible
number, and your password.
for an annuity, you or your beneficiary will receive a distri-
bution of your contributions to the retirement plan plus any
Choosing no withholding on payments outside the interest payable. Tax will be withheld at a 20% rate on the
United States. The choice for no withholding generally interest distributed. However, tax will not be withheld if you
can't be made for annuity payments to be delivered out- have OPM transfer (roll over) the interest directly to your
side the United States and its territories. traditional IRA or other qualified plan. If you have OPM
To choose no withholding if you are a U.S. citizen or transfer (roll over) the interest directly to a Roth IRA, the
resident alien, you must provide OPM with your home ad- entire amount will be taxed in the current year. Because
dress in the United States or its territories. Otherwise, no income tax will be withheld at the time of the transfer,
OPM has to withhold tax. For example, OPM must with- you may want to increase your withholding or pay estima-
hold if you provide a U.S. address for a nominee, trustee, ted taxes. See Rollover Rules in Part II. If you receive only
or agent (such as a bank) to whom the benefits are to be your contributions, no tax will be withheld.
delivered, but you don't provide your own U.S. home ad-
dress. Withholding from Thrift Savings Plan (TSP) pay-
If you don't provide a home address in the United ments. Generally, a distribution that you receive from the
States or its territories, you can choose not to have tax TSP is subject to federal income tax withholding. The
withheld only if you certify to OPM that you aren't a U.S. amount withheld is:
citizen, a U.S. resident alien, or someone who left the Uni- 20% if the distribution is an eligible rollover distribu-
•
ted States to avoid tax. But if you so certify, you may be tion;
subject to the 30% flat (or lower treaty) rate withholding
that applies to nonresident aliens. For details, see Pub. • 10% if it is a nonperiodic distribution other than an eli-
519, U.S. Tax Guide for Aliens. gible rollover distribution; or
• Determined using the instructions and tables provided
Withholding certificate. If you give OPM a Form W-4P in Pub. 15-T, based on information you provide on
for withholding on periodic pension or annuity payments, Form W-4P, if it is a periodic distribution.
or Form W-4R for withholding on nonperiodic payments,
you can choose not to have tax withheld or you can However, you can usually choose not to have tax withheld
choose to have tax withheld. You can’t choose to have no from TSP payments other than eligible rollover distribu-
tax withheld from eligible rollover distributions. The tions. By January 31 after the end of the year in which you
amount of federal income tax withheld depends on which receive a distribution, the TSP will issue Form 1099-R
form you need to complete. See the instructions for each showing the total distributions you received in the prior
form for more information. If you don't complete Form year and the amount of tax withheld.
W-4P, then for a payee who received a first periodic pay- For a detailed discussion of withholding on distributions
ment in 2023, OPM must withhold as if you were a single from the TSP, see the TSP publication Tax Rules about
filer who made no entries in Step 2, Step 3, and Step 4 of TSP Payments and Distributions. Both these publications
Form W-4P. For the default 2023 withholding for a payee are available on the TSP website at TSP.gov/forms.
who first received a periodic payment before 2023, see
Estimated tax. Generally, you must make estimated tax
Payee fails to furnish Form W-4P or provides an incorrect
payments for 2024 if you expect to owe at least $1,000 in
SSN on Form W-4P, in Pub. 15-T. If you don't complete
tax for 2024 (after subtracting your withholding and cred-
Form W-4R, then for a nonperiodic payment, OPM must
its) and you expect your withholding and your credits to be
withhold federal income tax at 10%, for an eligible rollover
less than the smaller of:
distribution, the default withholding rate is 20%.
• 90% of the tax to be shown on your income tax return
for 2024, or

4 Publication 721 (2023)

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• 100% of the tax shown on your 2023 income tax return Federal Employees, or Part V, Rules for Survivors of Fed-
(110% of that amount if the adjusted gross income eral Retirees, whichever applies.
shown on the return was more than $150,000
($75,000 if your filing status for 2024 will be married fil-
ing separately)). The return must cover all 12 months.
Part II
You don't have to pay estimated tax for 2024 if you were
a U.S. citizen or resident alien for all of 2023 and you had Rules for Retirees
no tax liability for the full 12-month 2023 tax year.
Pub. 505 and Form 1040-ES contain information that This part of the publication is for retirees who retired on
you can use to help you figure your estimated tax pay- nondisability retirement.
ments. If you retired on disability before you reached your
TIP minimum retirement age, see Part III, Rules for
Filing Requirements Disability Retirement and Credit for the Elderly or
the Disabled. However, on the day after you reach your
If your gross income, including the taxable part of your an- minimum retirement age, use the rules in this section to
nuity, is less than a certain amount, you generally don't report your disability retirement and begin recovering your
have to file a federal income tax return for that year. The cost.
gross income filing requirements for the tax year are in the
Instructions for Form 1040. Annuity statement. The statement you received from
Children. If you are the surviving spouse of a federal em- OPM when your CSRS or FERS annuity was approved
ployee or retiree and your monthly annuity check includes shows the commencing date (the annuity starting date),
a survivor annuity for one or more children, each child's the gross monthly rate of your annuity benefit, and your to-
annuity counts as their own income (not yours) for federal tal contributions to the retirement plan (your cost). You will
income tax purposes. use this information to figure the tax-free recovery of your
If your child can be claimed as a dependent, treat the cost.
taxable part of their annuity as unearned income when ap- Annuity starting date. If you retire from federal gov-
plying the filing requirements for dependents. ernment service on a regular annuity, your annuity starting
Form CSF 1099-R. Form CSF 1099-R will be mailed date is the commencing date on your annuity statement
by January 31 after the end of each tax year. It will show from OPM. If something delays payment of your annuity,
the total amount of the annuity you received in the past such as a late application for retirement, it doesn't affect
year. It should also show, separately, the survivor annuity the date your annuity begins to accrue or your annuity
for a child or children. Only the part that is each individu- starting date.
al's survivor annuity should be shown on that individual's Gross monthly rate. This is the amount you were to
Form 1040 or 1040-SR. get after any adjustment for electing a survivor's annuity or
If your Form CSF 1099-R doesn't separately show the for electing the lump-sum payment under the alternative
amount paid to you for a child or children, attach a state- annuity option (if either applies) but before any deduction
ment to your return, along with a copy of Form CSF for income tax withholding, insurance premiums, etc.
1099-R, explaining why the amount shown on the tax re-
turn differs from the amount shown on Form CSF 1099-R. Your cost. Your monthly annuity payment contains an
amount on which you have previously paid income tax.
You can also view and download your Form CSF This amount represents part of your contributions to the
1099-R by visiting the OPM website at retirement plan. Even though you didn't receive the money
servicesonline.opm.gov. To log in, you will need that was contributed to the plan, it was included in your
your retirement CSF claim number and password. gross income for federal income tax purposes in the years
it was taken out of your pay.
You may request a Summary of Payments, show- The cost of your annuity is the total of your contribu-
ing the amounts paid to you for your child(ren), tions to the retirement plan, as shown on your annuity
from OPM by calling OPM's Retirement Informa- statement from OPM. If you elected the alternative annuity
tion Office at 1-888-767-6738. You will need your CSF option, it includes any deemed deposits and any deemed
claim number and your social security number when you redeposits that were added to your lump-sum credit. (See
call. Lump-sum credit under Alternative Annuity Option, later.)
If you repaid contributions that you had withdrawn from
Taxable part of annuity. To find the taxable part of a re- the retirement plan earlier, or if you paid into the plan to re-
tiree's annuity when applying the filing requirements, see ceive full credit for service not subject to retirement deduc-
the discussion in Part II, Rules for Retirees, or Part III, tions, the entire repayment, including any interest, is a part
Rules for Disability Retirement and Credit for the Elderly or of your cost. You can't claim an interest deduction for any
the Disabled, whichever applies. To find the taxable part of interest payments. You can't treat these payments as vol-
each survivor annuity when applying the filing require- untary contributions; they are considered regular em-
ments, see the discussion in Part IV, Rules for Survivors of ployee contributions.

Publication 721 (2023) 5

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Recovering your cost tax free. How you figure the the total cost in the plan has been recovered are generally
tax-free recovery of the cost of your CSRS or FERS annu- fully taxable.
ity depends on your annuity starting date.
Example. Your annuity starting date is after 1986 and
• If your annuity starting date is before July 2, 1986, ei- you exclude $100 a month under the Simplified Method. If
ther the 3-Year Rule or the General Rule(both dis- your cost is $12,000, the exclusion ends after 10 years
cussed later) applies to your annuity. (120 months). Thereafter, your entire annuity is generally
• If your annuity starting date is after July 1, 1986, and fully taxable.
before November 19, 1996, you could have chosen to
Annuity starting date before 1987. If your annuity
use either the General Rule or the Simplified Method
starting date is before 1987, you can continue to take your
(discussed later).
monthly exclusion figured under the General Rule or Sim-
• If your annuity starting date is after November 18, plified Method for as long as you receive your annuity. If
1996, you must use the Simplified Method. you chose a joint and survivor annuity, your survivor can
Under both the General Rule and the Simplified continue to take that same exclusion. The total exclusion
Method, each of your monthly annuity payments is made may be more than your cost.
up of two parts: the tax-free part that is a return of your
Deduction of unrecovered cost. If your annuity starting
cost, and the taxable part that is the amount of each pay-
date is after July 1, 1986, and the cost of your annuity
ment that is more than the part that represents your cost
hasn't been fully recovered at your (or the survivor annui-
(unless such payment is used for purposes discussed un-
tant's) death, a deduction is allowed for the unrecovered
der Distributions Used To Pay Insurance Premiums for
cost. The deduction is claimed on your (or your survivor's)
Public Safety Officers, later). The tax-free part is a fixed
final tax return as an “Other Itemized Deduction.” If your
dollar amount. It remains the same, even if your annuity is
annuity starting date is before July 2, 1986, no tax benefit
increased. Generally, this rule applies as long as you re-
is allowed for any unrecovered cost at death.
ceive your annuity. However, see Exclusion limit, later.

Choosing a survivor annuity after retirement. If Simplified Method
you retired without a survivor annuity and report your an-
nuity under the Simplified Method, don't change your If your annuity starting date is after November 18, 1996,
tax-free monthly amount even if you later choose a survi- you must use the Simplified Method to figure the tax-free
vor annuity. part of your CSRS or FERS annuity. (OPM has figured the
If you retired without a survivor annuity and report your taxable amount of your annuity shown on your Form CSA
annuity under the General Rule, you must figure the 1099-R using the Simplified Method.) You could have
tax-free part of your annuity using a new exclusion per- chosen to use either the Simplified Method or the General
centage if you later choose a survivor annuity and take re- Rule if your annuity starting date is after July 1, 1986, but
duced annuity payments. To figure the new exclusion per- before November 19, 1996. The Simplified Method
centage, reduce your cost by the amount you previously doesn't apply if your annuity starting date is before July 2,
recovered tax free. Figure the expected return as of the 1986.
date the reduced annuity begins. For details on the Gen-
eral Rule, see Pub. 939. Under the Simplified Method, you figure the tax-free
part of each full monthly payment by dividing your cost by
Canceling a survivor annuity after retirement. If
a number of months based on your age. This number will
you retired with a survivor annuity payable to your spouse
differ depending on whether your annuity starting date is
upon your death and you notify OPM that your marriage
before November 19, 1996, or after November 18, 1996. If
has ended, your annuity might be increased to remove the
your annuity starting date is after 1997 and your annuity
reduction for a survivor benefit. The increased annuity
includes a survivor benefit for your spouse, this number is
doesn't change the cost recovery you figured at the annu-
based on your combined ages.
ity starting date. The tax-free part of each annuity payment
remains the same. Worksheet A. Use Worksheet A (near the end of this
For more information about choosing or canceling publication) to figure your taxable annuity. Be sure to keep
a survivor annuity after retirement, contact OPM's the completed worksheet. It will help you figure your taxa-
Retirement Information Office at 1-888-767-6738. ble amounts for later years.
Instead of Worksheet A, you can generally use
Exclusion limit. Your annuity starting date determines TIP the Simplified Method Worksheet in the Instruc-
the total amount of annuity payments that you can exclude tions for Form 1040 to figure your taxable annuity.
from income over the years. However, you must use Worksheet A and Worksheet B in
Annuity starting date after 1986. If your annuity this publication if you chose the alternative annuity option,
starting date is after 1986, the total amount of annuity in- discussed later.
come that you (or the survivor annuitant) can exclude over
Line 2. See Your cost, earlier, for an explanation of
the years as a return of your cost can't exceed your total
your cost in the plan. If your annuity starting date is after
cost. Annuity payments you or your survivors receive after
November 18, 1996, and you chose the alternative annuity

6 Publication 721 (2023)

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option (explained later), you must reduce your cost by the Under the General Rule, you figure the tax-free part of
tax-free part of the lump-sum payment you received. each full monthly payment by multiplying the initial gross
monthly rate of your annuity by an exclusion percentage.
Line 3. The number you enter on line 3 is the appropri-
Figuring this percentage is complex and requires the use
ate number from Table 1 or 2 representing approximate
of actuarial tables. For these tables and other information
life expectancies in months. If your annuity starting date is
about using the General Rule, see Pub. 939.
after 1997, use:

• Table 1 for an annuity without a survivor benefit, or 3-Year Rule
• Table 2 for an annuity with a survivor benefit.
If your annuity starting date is before 1998, use Table 1. If your annuity starting date was before July 2, 1986, you
probably had to report your annuity using the 3-Year Rule.
Line 6. If you received contributions tax free before Under this rule, you excluded all the annuity payments
2023, the amount previously recovered tax free that you from income until you fully recovered your cost. After your
must enter on line 6 is the total amount from line 10 of last cost was recovered, all payments became fully taxable.
year's worksheet. If your annuity starting date is before You can't use another rule to again exclude amounts from
November 19, 1996, and you chose the alternative annuity income.
option, this amount includes the tax-free part of the
lump-sum payment you received. The 3-Year Rule was repealed for retirees whose annu-
ity starting date is after July 1, 1986.
Example. Bill Smith retired from the federal govern-
ment on March 31, 2023, under an annuity that will pro-
Alternative Annuity Option
vide a survivor benefit for his wife, Kathy. His annuity start-
ing date is April 1, 2023, the annuity is paid in arrears, and
If you are eligible, you may choose an alternative form of
he received his first monthly annuity payment on May 1,
annuity. If you make this choice, you will receive a
2023. He must use the Simplified Method to figure the
lump-sum payment equal to your contributions to the plan
tax-free part of his annuity benefits.
and a reduced monthly annuity. You are eligible to make
Bill's monthly annuity benefit is $1,000. He had contrib-
this choice if you meet all of the following requirements.
uted $31,000 to his retirement plan and had received no
distributions before his annuity starting date. At his annuity • You are retiring, but not on disability.
starting date, he was 65 and Kathy was 57.
Bill's completed Worksheet A is shown later. To com- • You have a life-threatening illness or other critical
plete line 3, he used Table 2 at the bottom of the work- medical condition.
sheet and found that 310 is the number in the second col- • You don't have a former spouse entitled to court-or-
umn opposite the age range that includes 122 (his and dered benefits based on your service.
Kathy's combined ages). Bill keeps a copy of the comple-
ted worksheet for his records. It will help him (and Kathy, if If you aren't eligible or don't choose this alternative an-
she survives him) figure the taxable amount of the annuity nuity, you can skip the following discussion and go to Fed-
in later years. eral Gift Tax, later.
Bill's tax-free monthly amount is $100. (See line 4 of the
worksheet.) If he lives to collect more than 310 monthly Lump-Sum Payment
payments, he will generally have to include in his gross in-
come the full amount of any annuity payments received af- The lump-sum payment you receive under the alternative
ter 310 payments have been made. annuity option generally has a tax-free part and a taxable
If Bill doesn't live to collect 310 monthly payments and part. The tax-free part represents part of your cost. The
his wife begins to receive monthly payments, she will also taxable part represents part of the earnings on your annu-
exclude $100 from each monthly payment until 310 pay- ity contract. Your lump-sum credit (discussed later) may
ments (Bill's and hers) have been collected. If she dies be- include a deemed deposit or redeposit that is treated as
fore 310 payments have been made, an “Other Itemized being included in your lump-sum payment even though
Deduction” will be allowed for the unrecovered cost on her you don’t actually receive such amounts. Deemed depos-
final income tax return. its and redeposits, which are described later under
Lump-sum credit, are taxable to you in the year of retire-
General Rule ment. Your taxable amount may therefore be more than
the lump-sum payment you receive.
If your annuity starting date is after November 18, 1996,
you can't use the General Rule to figure the tax-free part of You must include the taxable part of the lump-sum pay-
your CSRS or FERS annuity. If your annuity starting date ment in your income for the year you receive the payment
is after July 1, 1986, but before November 19, 1996, you unless you roll it over into another qualified plan or an IRA.
could have chosen to use either the General Rule or the If you don't have OPM transfer the taxable amount to an
Simplified Method. If your annuity starting date is before IRA or other plan in a direct rollover, tax will be withheld at
July 2, 1986, you could have chosen to use the General a 20% rate. See Rollover Rules, later, for information on
Rule only if you couldn't use the 3-Year Rule. how to make a rollover.

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Worksheet A. Simplified Method for Bill Smith                                                           Keep for Your Records
  See the instructions in Part II of this publication under Simplified Method.
  1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, 
    1040-SR, or 1040-NR, line 5a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                1.  $ 8,000
  2. Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion.  See * Your cost in Part II, 
    Rules for Retirees, earlier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.    31,000
    Note. If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 
    and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or 
    annuity has changed). Otherwise, go to line 3.
  3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the 
    payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below . . . . .                                                        3.    310
  4. Divide line 2 by the number on line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                4.    100
  5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date 
    was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go 
    to line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.    800
  6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of 
    your worksheet for last year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            6.    0
  7. Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        7.    31,000
  8. Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              8.    800
  9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this 
    amount to the total for Form 1040 or 1040-SR, line 5b. If you are a nonresident alien, enter this amount on line 1 
    of Worksheet C. If your Form CSA 1099-R or Form CSF 1099-R shows a larger amount, use the amount figured 
    on this line instead. If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums 
    for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 . . . . . . .                                                   9.  $ 7,200
10. Was your annuity starting date before 1987? 
            STOP
       Yes.       Don't complete the rest of this worksheet.
     
      No. Add lines 6 and 8. This is the amount you have recovered tax free through 2023. You will need this 
    number if you need to fill out this worksheet next year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         10.   800
11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you will not have to complete this 
    worksheet next year. The payments you receive next year will generally be fully taxable . . . . . . . . . . . . . . . . . .                                               11. $ 30,200

                                                  Table 1 for Line 3 Above
                                                                          AND your annuity starting date was—
    IF your age on your                                     before November 19, 1996,                   after November 18, 1996, 
    annuity starting date was . . .                         THEN enter on line 3 . . .                  THEN enter on line 3 . . .
    55 or under                                                           300                                                                                                 360
    56–60                                                                 260                                                                                                 310
    61–65                                                                 240                                                                                                 260
    66–70                                                                 170                                                                                                 210
    71 or over                                                            120                                                                                                 160
                                                  Table 2 for Line 3 Above
    IF the annuitants' combined 
    ages on your annuity starting 
    date were . . .                                         THEN enter on line 3 . . .
    110 or under                                                          410
    111–120                                                               360
    121–130                                                               310
    131–140                                                               260
    141 or over                                                           210

  * A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died 
before August 21, 1996.

8                                                                                                                   Publication 721 (2023)

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Worksheet B. Lump-Sum Payment for David Brown
              See the instructions in Part II of this publication 
              under Alternative Annuity Option.                                                 Keep for Your Records

1. Enter your lump-sum credit (your cost in the plan at the annuity starting date) . . . . . . . . . . . . . . . . .                                     1.         $ 31,000
2. Enter the present value of your annuity contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      2.           155,000
3. Divide line 1 by line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       3.           0.20
4. Tax-free amount. Multiply line 1 by line 3. (Caution: Don't include this amount on line 6 of 
   Worksheet A in this publication.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             4.         $ 6,200
5. Taxable amount (net cost in the plan). Subtract line 4 from line 1. Include this amount in the total 
   on Form 1040, 1040-SR, or 1040-NR, line 5b. Also, enter this amount on line 2 of Worksheet A in this 
   publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.         $ 24,800

        OPM  can  make  a  direct  rollover  only  up  to  the            If  you  are  receiving  a  lump-sum  payment  under 
!       amount  of  the  lump-sum  payment.  Therefore,  to               the alternative annuity option, you can write to the 
CAUTION defer  tax  on  the  full  taxable  amount  if  it  is  more      address  below  to  find  out  the  present  value  of 
than  the  payment,  you  must  add  funds  from  another            your annuity contract.
source.
                                                                     Internal Revenue Service
                                                                     Attn: Actuarial Group 2
The  taxable  part  of  the  lump-sum  payment  doesn't 
                                                                     TE/GE SE:T:EP:RA:T:A2
qualify as a lump-sum distribution eligible for capital gain 
                                                                     NCA-629
treatment or the 10-year tax option. It may also be subject 
                                                                     1111 Constitution Ave. NW
to an additional 10% tax on early distributions if you sepa-
                                                                     Washington, DC 20224-0002
rate  from  service  before  the  calendar  year  in  which  you 
reach age 55, even if you reach age 55 in the year you re-
ceive  the  lump-sum  payment.  For  more  information,  see 
Lump-Sum Distributions and Tax on Early Distributions in             Example.     David Brown retired from the federal govern-
Pub. 575.                                                            ment in 2023, 1 month after his 55th birthday. He had con-
                                                                     tributed  $31,000  to  his  retirement  plan  and  chose  to  re-
Worksheet  B. Use   Worksheet  B  (near  the  end  of  this          ceive  a  lump-sum  payment  of  that  amount  under  the 
publication)  to  figure  the  taxable  part  of  your  lump-sum     alternative annuity option. The present value of his annuity 
payment.  Be  sure  to  keep  the  completed  worksheet  for         contract is $155,000.
your records.                                                        The tax-free part and the taxable part of the lump-sum 
To complete the worksheet, you will need to know the                 payment are figured using                                                           Worksheet B, as shown in the 
amount of your lump-sum credit and the present value of              completed worksheet. The taxable part ($24,800) is also 
your annuity contract.                                               his net cost in the plan, which is used to figure the taxable 
                                                                     part of his reduced annuity payments. See                                                      Reduced An-
Lump-sum credit.           Generally, this is the same amount 
                                                                     nuity, later.
as  the  lump-sum  payment  you  receive  (the  total  of  your 
contributions to the retirement system). However, for pur-           Lump-sum payment in installments.                                                              If you choose the 
poses  of  the  alternative  annuity  option,  your  lump-sum        alternative  annuity  option,  you  will  usually  receive  the 
credit may also include deemed deposits and redeposits               lump-sum  payment  in  one  installment.  The  overall  tax 
that OPM advanced to your retirement account so that you             treatment is explained at the beginning of this discussion.
are  given  credit  for  the  service  they  represent.  Deemed 
deposits  (including  interest)  are  for  federal  employment       How  to  report. Add  any  actual  or  deemed  payment  of 
during which no retirement contributions were taken out of           your lump-sum credit (defined earlier) to the total for Form 
your  pay.  Deemed  redeposits  (including  interest)  are  for      1040,  1040-SR,  or  1040-NR,  line  5a.  Add  the  taxable 
any refunds of retirement contributions that you received            amount to the total for Form 1040, 1040-SR, or 1040-NR, 
and didn't repay. You are treated as if you had received a           line 5b, unless you roll over the taxable part to your tradi-
lump-sum payment equal to the amount of your lump-sum                tional IRA or a qualified retirement plan.
credit and then had made a repayment to OPM of the ad-
vanced amounts.                                                      Reduced Annuity
Present  value  of  your  annuity  contract.            The 
                                                                     If you have chosen to receive a lump-sum payment under 
present value of your annuity contract is figured using ac-
                                                                     the  alternative  annuity  option,  you  will  also  receive  re-
tuarial tables provided by the IRS.
                                                                     duced  monthly  annuity  payments.  These  annuity  pay-
                                                                     ments each will have a tax-free and a taxable part. To fig-
                                                                     ure  the  tax-free  part  of  each  annuity  payment,  you  must 
                                                                     use the Simplified Method (Worksheet A). For instructions 

Publication 721 (2023)                                                                                                                                                9

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on how to complete the worksheet, see Worksheet A un- spouse, the unlimited marital deduction will not apply. This
der Simplified Method, earlier. may result in a taxable gift.
To complete Worksheet A, line 2, you must reduce your More information. For information about the gift tax,
cost in the plan by the tax-free part of the lump-sum pay- see Form 709, United States Gift (and Generation-Skip-
ment you received. Enter as your net cost on line 2 the ping Transfer) Tax Return, and its instructions.
amount from Worksheet B, line 5. Don't include the
tax-free part of the lump-sum payment with other amounts Retirement During the Past Year
recovered tax free (Worksheet A, line 6) when limiting your
total exclusion to your total cost. If you have recently retired, the following discussions cov-
ering annual leave, voluntary contributions, and commun-
Example. The facts are the same as in the example for ity property may apply to you.
David Brown in the preceding discussion. In addition, Da-
vid received 10 annuity payments in 2023 of $1,200 each. Annual leave. A payment for accrued annual leave re-
Using Worksheet A, he figures the taxable part of his an- ceived on retirement is a salary payment. It is taxable as
nuity payments. He completes line 2 by reducing his wages in the tax year you receive it.
$31,000 cost by the $6,200 tax-free part of his lump-sum
payment. His entry on line 2 is his $24,800 net cost in the Voluntary contributions. Voluntary contributions to the
plan (the amount from Worksheet B , line 5). He doesn't in- retirement fund are those made in addition to the regular
clude the tax-free part of his lump-sum payment on Work- contributions that were deducted from your salary. They
sheet A, line 6. An example of David's filled-in Worksheet also include the regular contributions withheld from your
A is shown in this publication. salary after you have the years of service necessary for
the maximum annuity allowed by law. Voluntary contribu-
Reemployment after choosing the alternative tions aren't the same as employee contributions to the
! annuity option. If you chose this option when Thrift Savings Plan. See Thrift Savings Plan, later.
CAUTION you retired and then you were reemployed by the
federal government before retiring again, your Form CSA Additional annuity benefit. If you choose to receive
1099-R may show only the amount of your contributions to an additional annuity benefit from your voluntary contribu-
your retirement plan during your reemployment. If the tions, it is treated separately from the annuity benefit that
amount on the form doesn't include all your contributions, comes from the regular contributions deducted from your
disregard it and use your total contributions to figure the salary. This separate treatment applies for figuring the
taxable part of your annuity payments. amounts to be excluded from, and included in, gross in-
come. It doesn't matter that you receive only one monthly
check covering both benefits. Each year, you will receive a
Annuity starting date before November 19, 1996. If
Form CSA 1099-R that will show how much of your total
your annuity starting date is before November 19, 1996,
annuity received in the past year was from each type of
and you chose the alternative annuity option, the taxable
benefit.
and tax-free parts of your lump-sum payment and your an-
Figure the taxable and tax-free parts of your additional
nuity payments are figured using different rules. Under
monthly benefits from voluntary contributions using the
those rules, you don't reduce your cost in the plan (Work-
rules that apply to regular CSRS and FERS annuities, as
sheet A, line 2) by the tax-free part of the lump-sum pay-
explained earlier.
ment. However, you must include that tax-free amount
with other amounts previously recovered tax free (Work- Refund of voluntary contributions. If you choose to
sheet A, line 6) when limiting your total exclusion to your receive a refund of your voluntary contributions plus ac-
total cost. crued interest, the interest is taxable to you in the tax year
it is distributed unless you roll it over to a traditional IRA or
Federal Gift Tax another qualified retirement plan. If you don't have OPM
transfer the interest to a traditional IRA or other qualified
If, through the exercise or nonexercise of an election or retirement plan in a direct rollover, tax will be withheld at a
option, you provide an annuity for your beneficiary at or af- 20% rate. See Rollover Rules, later. The interest doesn't
ter your death, you have made a gift. The gift may be taxa- qualify as a lump-sum distribution eligible for capital gain
ble for gift tax purposes. The value of the gift is equal to treatment or the 10-year tax option. It may also be subject
the value of the annuity. to an additional 10% tax on early distributions if you sepa-
rate from service before the calendar year in which you
Joint and survivor annuity. If the gift is an interest in a reach age 55 (or before the earlier of age 50 or completing
joint and survivor annuity where only you and your spouse 25 years of service under the plan if you are a qualified
can receive payments before the death of the last spouse public safety employee). For more information, see
to die, the gift will generally qualify for the unlimited marital Lump-Sum Distributions and Tax on Early Distributions in
deduction. This will eliminate any gift tax liability with re- Pub. 575.
gard to that gift.
If you provide survivor annuity benefits for someone
other than your current spouse, such as your former

10 Publication 721 (2023)

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Worksheet A. Simplified Method for David Brown                                                        Keep for Your Records
See the instructions in Part II of this publication under Simplified Method.
1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, 
1040-SR, or 1040-NR, line 5a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                1.  $ 12,000
2. Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion.  See * Your cost in Part II, 
Rules for Retirees, earlier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.    24,800
Note. If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 
and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or 
annuity has changed). Otherwise, go to line 3.
3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the 
payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below . . . . .                                                        3.    360
4. Divide line 2 by the number on line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              4.    68.89
5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date 
was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go 
to line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.    688.90
6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of 
your worksheet for last year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            6.    0
7. Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      7.    24,800
8. Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            8.    688.90
9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this 
amount to the total for Form 1040 or 1040-SR, line 5b. If you are a nonresident alien, enter this amount on line 1 
of Worksheet C. If your Form CSA 1099-R or Form CSF 1099-R shows a larger amount, use the amount figured 
on this line instead. If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums 
for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 . . . . . . .                                                   9.  $ 11,311.10
10. Was your annuity starting date before 1987? 
         STOP
      Yes.   Don't complete the rest of this worksheet.
 
     No. Add lines 6 and 8. This is the amount you have recovered tax free through 2023. You will need this 
number if you need to fill out this worksheet next year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         10.   688.90
11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you will not have to complete this 
worksheet next year. The payments you receive next year will generally be fully taxable . . . . . . . . . . . . . . . . . .                                               11. $ 24,111.10

                                                Table 1 for Line 3 Above
                                                                        AND your annuity starting date was—
IF your age on your                                       before November 19, 1996,                   after November 18, 1996, 
annuity starting date was . . .                           THEN enter on line 3 . . .                  THEN enter on line 3 . . .
55 or under                                                           300                                                                                                 360
56–60                                                                 260                                                                                                 310
61–65                                                                 240                                                                                                 260
66–70                                                                 170                                                                                                 210
71 or over                                                            120                                                                                                 160
                                                Table 2 for Line 3 Above
IF the annuitants' combined 
ages on your annuity starting 
date were . . .                                           THEN enter on line 3 . . .
110 or under                                                          410
111–120                                                               360
121–130                                                               310
131–140                                                               260
141 or over                                                           210

* A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died be-
fore August 21, 1996.

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Community property laws. State community property This method of figuring your total contributions doesn't
laws apply to your annuity. These laws will affect your in- apply to any contributions the government made on your
come tax only if you file a return separately from your behalf after you became a citizen or a resident alien of the
spouse. United States.
Generally, the determination of whether your annuity is
separate income (taxable to you) or community income Limit on taxable amount. There is a limit on the taxable
(taxable to both you and your spouse) is based on your amount of payments received from the CSRS, the FERS,
marital status and domicile when you were working. Re- or the TSP by a nonresident alien retiree or nonresident
gardless of whether you are now living in a community alien beneficiary. Figure this limited taxable amount by
property state or a noncommunity property state, your cur- multiplying the otherwise taxable amount by a fraction.
rent annuity may be community income if it is based on The numerator of the fraction is the retiree's total U.S.
services you performed while married and domiciled in a Government basic pay, other than tax-exempt pay for
community property state. services performed outside the United States. The de-
At any time, you have only one domicile even though nominator is the retiree's total U.S. Government basic pay
you may have more than one home. Your domicile is your for all services.
fixed and permanent legal home that you intend to use for Basic pay includes regular pay plus any standby differ-
an indefinite or unlimited period, and to which, when ab- ential. It doesn't include bonuses, overtime pay, certain
sent, you intend to return. The question of your domicile is retroactive pay, uniform or other allowances, or lump-sum
mainly a matter of your intentions as indicated by your ac- leave payments.
tions. To figure the limited taxable amount of your CSRS or
If your annuity is a mixture of community income and FERS annuity or your TSP distributions, use Worksheet C.
separate income, you must divide it between the two kinds (For an annuity, first complete Worksheet A in this publica-
of income. The division is based on your periods of serv- tion.)
ice and domicile in community and noncommunity prop-
erty states while you were married.
Worksheet C. Limited Taxable
For more information, see Pub. 555, Community Prop-
erty. Amount
for Nonresident Alien
Keep for Your Records
Reemployment After Retirement
1. Enter the otherwise taxable amount of
If you retired from federal service and are later rehired by the CSRS or FERS annuity (from line 9
the federal government as an employee, you can continue of Worksheet A or from Form CSA
to receive your annuity during reemployment. The employ- 1099-R or CSF 1099-R) or TSP
ing agency will usually pay you the difference between distributions (from Form 1099-R) . . . . . 1.
your salary for your period of reemployment and your an- 2. Enter the total U.S. Government basic
nuity. This amount is taxable as wages. Your annuity will pay other than tax-exempt pay for
continue to be taxed just as it was before. If you are still re- services performed outside the United
covering your cost, you continue to do so. If you have re- States . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
covered your cost, the annuity you receive while you are 3. Enter the total U.S. Government basic
reemployed is generally fully taxable. pay for all services . . . . . . . . . . . . . . . . . 3.
4. Divide line 2 by line 3 . . . . . . . . . . . . . . . 4.
Nonresident Aliens 5. Limited taxable amount. Multiply
line 1 by line 4. Enter this amount on
The following special rules apply to nonresident alien fed- Form 1040-NR, line 5b . . . . . . . . . . . . . . 5.
eral employees performing services outside the United
States and to nonresident alien retirees and beneficiaries. Example 1. You are a nonresident alien who per-
A nonresident alien is an individual who isn't a citizen or a formed all services for the U.S. Government abroad as a
resident alien of the United States. nonresident alien. You retired and began to receive a
monthly annuity of $200. Your total basic pay for all serv-
Special rule for figuring your total contributions. Your ices for the U.S. Government was $100,000. All of your
contributions to the retirement plan (your cost) also in- basic pay was tax exempt because it wasn't U.S. source
clude the government's contributions to the plan to a cer- income.
tain extent. You include government contributions that The taxable amount of your annuity using Worksheet A
wouldn't have been taxable to you at the time they were in this publication is $720. You are a nonresident alien, so
contributed if they had been paid directly to you. For ex- you figure the limited taxable amount of your annuity using
ample, government contributions wouldn't have been taxa- Worksheet C as follows.
ble to you if, at the time made, your services were per-
formed outside the United States. Thus, your cost is
increased by these government contributions, and the
benefits that you, or your beneficiary, must include in in-
come are reduced.

12 Publication 721 (2023)

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Worksheet C. Limited Taxable Thrift Savings Plan (TSP)
Amount
for Nonresident Generally, all of the money in your TSP account is taxed
as ordinary income when you receive it. (However, see
Alien—Example 1
Roth TSP balance and Uniformed services TSP accounts
Keep for Your Records next.) This is because neither the contributions to your tra-
1. Enter the otherwise taxable amount of ditional TSP balance nor its earnings have been included
the CSRS or FERS annuity (from line 9 previously in your taxable income. The way that you with-
of Worksheet A or from Form CSA draw your account balance determines when you must
1099-R or CSF 1099-R) or TSP pay the tax.
distributions (from Form 1099-R) . . . . . 1. $ 720
2. Enter the total U.S. Government basic Roth TSP balance. The TSP also offers a Roth TSP op-
pay other than tax-exempt pay for tion, which allows you to make after-tax contributions into
services performed outside the United your TSP account. This means Roth TSP contributions are
States . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 0 included in your income. The contribution limits are the
3. Enter the total U.S. Government basic same as the traditional TSP. You can elect to have part or
pay for all services . . . . . . . . . . . . . . . . . 3. 100,000 all of your TSP contributions designated as a Roth TSP.
4. Divide line 2 by line 3 . . . . . . . . . . . . . . . 4. 0 Agency contributions will be part of your traditional TSP
balance. Also, you can't roll over any portion of your tradi-
5. Limited taxable amount. Multiply tional TSP into your Roth TSP.
line 1 by line 4. Enter this amount on Qualified distributions from your Roth TSP aren't inclu-
Form 1040-NR, line 5b . . . . . . . . . . . . . . 5. 0
ded in income. This applies to both your contributions to
the account and income earned on that account. A quali-
Example 2. You are a nonresident alien who per- fied distribution is generally a distribution that is:
formed services for the U.S. Government as a nonresident
alien both within the United States and abroad. You retired • Made after a 5-tax-year period of participation; and
and began to receive a monthly annuity of $240. • Made on or after the date you reach age 59 / , made 1 2
Your total basic pay for your services for the U.S. Gov- to a beneficiary or your estate on or after your death,
ernment was $120,000; $40,000 was for work done in the or attributable to your being disabled.
United States and $80,000 was for your work done in a
For more information, go to the TSP website, TSP.gov,
foreign country. The part of your total basic pay for your
or the TSP Service Office. See Pub. 575 for more informa-
work done in a foreign country was tax exempt because it
tion about designated Roth accounts.
wasn't U.S. source income.
The taxable amount of your annuity figured using Work- Uniformed services TSP accounts. If you have a uni-
sheet A in this publication is $1,980. You are a nonresi- formed services TSP account that includes contributions
dent alien, so you figure the limited taxable amount of your from combat pay, the distributions attributable to those
annuity using Worksheet C as follows. contributions are tax exempt. However, any earnings on
those contributions to a traditional TSP balance are sub-
ject to tax when they are distributed. See Roth TSP bal-
Worksheet C. Limited Taxable
ance, discussed previously, to get more information about
Amount Roth contributions. The statement you receive from the
for Nonresident TSP will separately state the total amount of your distribu-
Alien—Example 2 tion and the amount of your taxable distribution for the
Keep for Your Records year. You can get more information from the TSP website,
TSP.gov, or the TSP Service Office.
1. Enter the otherwise taxable amount of
the CSRS or FERS annuity (from line 9 Direct rollover by the TSP. If you ask the TSP to transfer
of Worksheet A or from Form CSA any part of the money in your account, from traditional
1099-R or CSF 1099-R) or TSP contributions and earnings, to a traditional IRA or other
distributions (from Form 1099-R) . . . . . 1. $ 1,980
qualified retirement plan, the tax on that part is deferred
2. Enter the total U.S. Government basic until you receive payments from the traditional IRA or
pay other than tax-exempt pay for other plan. However, see the following Note for a discus-
services performed outside the United sion on direct rollovers by the TSP of Roth contributions
States . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 40,000
and earnings. Also, see Rollover Rules, later.
3. Enter the total U.S. Government basic
pay for all services . . . . . . . . . . . . . . . . . 3. 120,000 Direct rollover by the TSP to a Roth IRA. If you ask the
4. Divide line 2 by line 3 . . . . . . . . . . . . . . . 4. 0.333 TSP to transfer any part of the money in your account,
5. Limited taxable amount. Multiply from traditional contributions and earnings, to a Roth IRA,
line 1 by line 4. Enter this amount on the amount transferred will be taxed in the current year.
Form 1040-NR, line 5b . . . . . . . . . . . . . . 5. 659 However, see the following Note for a discussion on direct
rollovers by the TSP of Roth contributions and earnings.

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Also, see Rollovers to Roth IRAs, later, for more informa- subject to an additional 10% tax on early distributions.
tion. However, this additional tax doesn't apply in certain situa-
tions, including any of the following.
Note. A direct rollover of your Roth contributions and
earnings in your TSP account if certain conditions are met • You receive the distribution and separate from govern-
(see Roth TSP balance, earlier) to a Roth 401(k), Roth ment service during or after the calendar year in which
403(b), Roth 457(b), or Roth IRA aren't subject to tax you reach age 55.
when they are transferred or when you receive payments • You are a qualified public safety employee and you
from those accounts at a later date. This is because you have completed at least 25 years of service under the
already paid tax on those contributions. You can't roll over plan or have attained 50 years of age (whichever is
Roth contributions and earnings in your TSP account to a earlier).
traditional IRA.
• You choose to receive your account balance in sub-
TSP annuity. If you ask the TSP to buy an annuity with stantially equal payments (not less than yearly) based
the money in your account from traditional contributions on your life expectancy.
and earnings, the annuity payments are taxed when you • You are totally and permanently disabled.
receive them. The payments aren't subject to the addi-
tional 10% tax on early distributions, even if you are under • You receive amounts from your Roth contributions that
represent a return of your cost (after-tax money). The
age 55 when they begin. However, there is no tax on the
earnings may be subject to the 10% tax depending on
annuity payments if the annuity is purchased using the
whether you met certain conditions. See Roth TSP
money in your account from Roth contributions and earn-
balance, earlier.
ings if certain conditions are met. See Roth TSP balance,
earlier. This is because you already paid tax on those con- Note. Changes to the initial distribution method or
tributions. amount under the equal payment exception may result in
a recapture tax.
Cash withdrawals. If you withdraw any of the money in
For more information, see Tax on Early Distributions in
your TSP account from traditional contributions and earn-
Pub. 575.
ings, it is generally taxed as ordinary income when you re-
ceive it unless you roll it over into a traditional IRA or other Outstanding loan. If the TSP declares a distribution from
qualified plan. (See Rollover Rules, later.) If you receive your account because money you borrowed hasn't been
your entire TSP account balance in a single tax year, you repaid when you separate from government service, your
may be able to use the 10-year tax option to figure your account is reduced and the amount of the distribution
tax if the plan participant was born before January 2, (your unpaid loan balance and any unpaid interest), from
1936. See Lump-Sum Distributions in Pub. 575 for details. traditional contributions and earnings, is taxed in the year
However, there is no tax if you withdraw money in your declared. The distribution may also be subject to the addi-
TSP account from Roth contributions and earnings if cer- tional 10% tax on early distributions. However, the tax will
tain conditions are met. See Roth TSP balance, earlier. be deferred if you make a rollover contribution to a tradi-
If you receive a single payment or you choose to re- tional IRA or other qualified plan equal to the declared dis-
ceive your account balance in monthly payments over a tribution amount. See Rollover Rules, later.
period of less than 10 years, the TSP must generally with- If you withdraw any money from your TSP account in
hold 20% for federal income tax. If you choose to receive that same year, the TSP must withhold income tax of 20%
your account balance in monthly payments over a period of the total of the declared distribution and the amount
of 10 or more years or a period based on your life expect- withdrawn. However, no withholding is required for por-
ancy, withholding is determined using the instructions and tions of the distribution that is from Roth contributions and
tables provided in Pub. 15–T, based on information you earnings if certain conditions are met. See Roth TSP bal-
provide on Form W-4P. If you don’t submit Form W-4P ance, earlier.
then for a payee who received a first periodic payment in
2023, the TSP must withhold as if you were a single filer More information. For more information about the TSP,
who made no entries in Step 2, Step 3, and Step 4 of see Summary of the Thrift Savings Plan. Also, see Tax
Form W-4P. For the default 2023 withholding for a payee Rules about TSP Payments and Distributions. These pub-
who first received a periodic payment before 2023, see lications are available on the TSP website at TSP.gov/
Payee fails to furnish Form W-4P or provides an incorrect forms. You may also call the TSP at 877–968–3778. For
SSN on Form W-4P, in Pub. 15-T. See also Withholding participants who are deaf, hard of hearing, or have a
from Thrift Savings Plan payments, earlier, under Tax speech disability, dial 711 from any telephone.
Withholding and Estimated Tax in Part I. However, there is
no withholding requirement for amounts withdrawn from
Rollover Rules
your TSP account that is from Roth contributions and
earnings if certain conditions are met. See Roth TSP bal- If you withdraw cash or other assets from a qualified retire-
ance, earlier, for a discussion of those conditions. ment plan in an eligible rollover distribution, you can gen-
Tax on early distributions. Any money paid to you erally defer tax on the distribution by rolling it over to an-
from your TSP account before you reach age 59 / may be 1 2 other qualified retirement plan, a traditional IRA, or, after 2
years of participation in a SIMPLE IRA sponsored by your

14 Publication 721 (2023)

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employer, a SIMPLE IRA under that plan. You don't in- c. A period of 10 years or more;
clude the amount rolled over in your income, and you can't
2. A required minimum distribution generally beginning
take a deduction for it. The amount rolled over is taxed
at age 73;
later as the new program pays that amount to you. If you
roll over amounts into a traditional IRA, later distributions 3. A declared distribution because of an unrepaid loan, if
of these amounts from the traditional IRA don't qualify for you haven't separated from government service (see
the capital gain or the 10-year tax option. However, capital Outstanding loan under Thrift Savings Plan, earlier);
gain treatment or the 10-year tax option will be restored if or
the traditional IRA contains only amounts rolled over from
4. A hardship distribution.
a qualified plan and these amounts are rolled over from
the traditional IRA into a qualified retirement plan. To qual- In addition, a distribution to your beneficiary isn’t gener-
ify for the capital gain treatment or 10-year tax option, the ally treated as an eligible rollover distribution. However,
plan participant must have been born before January 2, see Qualified domestic relations order (QDRO) Rollovers ,
1936. by surviving spouse, and Rollovers by nonspouse benefi-
ciary, later.
You can also roll over a distribution from a qualified re-
tirement plan into a Roth IRA. Although the transfer of a Direct rollover option. You can choose to have OPM or
distribution into a Roth IRA is considered a rollover for the TSP transfer any part of an eligible rollover distribution
Roth IRA purposes, it isn't a tax-free transfer unless you directly to another qualified retirement plan that accepts
are rolling over amounts from Roth contributions and earn- rollover distributions or to a traditional IRA or Roth IRA.
ings. See Rollovers to Roth IRAs, later, for more informa- There is an automatic rollover requirement for manda-
tion. tory distributions. A mandatory distribution is a distribution
made:
Rollovers to SIMPLE retirement accounts. You can roll
over amounts from a qualified retirement plan or an IRA • Without your consent; and
into a SIMPLE retirement account as follows. • Before you reach age 62 or normal retirement age,
1. During the first 2 years of participation in a SIMPLE whichever is later.
retirement account, you may roll over amounts from The automatic rollover requirement applies if the distribu-
one SIMPLE retirement account into another SIMPLE tion is more than $1,000 and is an eligible rollover distribu-
retirement account. tion. You can choose to have the distribution paid directly
2. After the first 2 years of participation in a SIMPLE re- to you or rolled over directly to your traditional or Roth IRA
tirement account, you may roll over amounts from a or another qualified retirement plan. If you don't make this
SIMPLE retirement account, a qualified retirement choice, OPM will automatically roll over the distribution
plan, or an IRA into a SIMPLE retirement account. into an IRA of a designated trustee or issuer.
No tax withheld. If you choose the direct rollover op-
Qualified retirement plan. For this purpose, a qualified tion or have an automatic rollover, no tax will be withheld
retirement plan is generally: from any part of the distribution that is directly paid to the
• A qualified employee plan, trustee of the other plan. However, if the rollover is to a
Roth IRA, you may want to choose to have tax withheld
• A qualified employee annuity,
because any amount rolled over is generally included in
• A tax-sheltered annuity plan (403(b) plan), or income. Any part of the eligible rollover distribution paid to
• An eligible state or local government section 457 de- you is subject to withholding at a 20% rate. Direct rollover
ferred compensation plan. amounts from Roth contributions and earnings don't have
tax withheld because you already paid tax on those
The CSRS, FERS, and TSP are considered qualified re- amounts.
tirement plans.
Payment to you option. If an eligible rollover distribution
Distributions eligible for rollover treatment. If you re- is paid to you, OPM or the TSP must withhold 20% for in-
ceive a refund of your CSRS or FERS contributions when come tax even if you plan to roll over the distribution to an-
you leave government service, you can roll over any inter- other qualified retirement plan, or traditional or Roth IRA.
est you receive on the contributions. You can't roll over any However, the full amount is treated as distributed to you
part of your CSRS or FERS annuity payments. even though you actually receive only 80%. You must gen-
You can roll over a distribution of any part of your TSP erally include in income any part (including the part with-
account balance except: held) that you don't roll over within 60 days to another
1. A distribution of your account balance that you qualified retirement plan or to a traditional IRA. Rollovers
choose to receive in (typically monthly, but not less to Roth IRAs are generally included in income. Eligible
frequently than annually) payments over: rollover distributions that are from Roth contributions don't
have tax withheld because you already paid tax on those
a. Your life expectancy, amounts.
b. The joint life expectancies of you and your benefi- If you leave government service before the calendar
ciary, or year in which you reach age 55 and are under age 59 /1 2

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when a distribution is paid to you, you may have to pay an the various types of retirement plans (including IRAs), and
additional 10% tax on any part, including any tax withheld, other topics regarding rollovers, see Rollovers in Pub.
that you don't roll over. If you are a qualified public safety 590-A. For information about the extended rollover period
employee and you have completed at least 25 years of for a qualified plan loan offset, see Plan loan offset under
service under the plan or have attained 50 years of age Time for making rollover in Pub. 575.
(whichever is earlier), the additional tax doesn't apply to A letter ruling isn't required if a financial institution re-
you. Distributions from Roth contributions will not be sub- ceives the rollover funds during the 60-day rollover period,
ject to the 10% additional tax because they are a return of you follow all procedures required by the financial institu-
your cost (after-tax money). Earnings from those contribu- tion, and, solely due to an error on the part of the financial
tions may be subject to the 10% additional tax if certain institution, the funds aren't deposited into an eligible retire-
conditions aren't met. See Roth TSP balance, earlier. ment account within the 60-day rollover period.
Also, see Tax on Early Distributions in Pub. 575.
Frozen deposits. If an amount distributed to you be-
Exception to withholding. Withholding from an eligi- comes a frozen deposit in a financial institution during the
ble rollover distribution paid to you isn't required if the dis- 60-day period after you receive it, the rollover period is ex-
tributions for your tax year total less than $200. tended. An amount is a frozen deposit if you can't with-
draw it because of either:
Partial rollovers. A lump-sum distribution may qualify
for capital gain treatment or the 10-year tax option if the • The bankruptcy or insolvency of the financial institu-
plan participant was born before January 2, 1936. See tion, or
Lump-Sum Distributions in Pub. 575. However, if you roll • Any requirement imposed by the state in which the in-
over any part of the distribution, the part you keep doesn't stitution is located because of the bankruptcy or insol-
qualify for this special tax treatment. vency (or threat of it) of one or more financial institu-
Rolling over more than amount received. If you tions in the state.
want to roll over more of an eligible rollover distribution The 60-day rollover period is extended by the period for
than the amount you received after income tax was with- which the amount is a frozen deposit and doesn't end ear-
held, you will have to add funds from some other source lier than 10 days after the amount is no longer a frozen de-
(such as your savings or borrowed amounts). posit.

Example. You left government service at age 53. On Qualified domestic relations order (QDRO). You may
February 3, 2023, you receive an eligible rollover distribu- be able to roll over tax free all or part of a distribution you
tion of $10,000 from your TSP account, which is from tra- receive from the CSRS, the FERS, or the TSP under a
ditional contributions and earnings. The TSP withholds court order in a divorce or similar proceeding. You must
$2,000, so you actually receive $8,000. If you want to roll receive the distribution as the government employee's
over the entire $10,000 to postpone including that amount spouse or former spouse (not as a nonspousal benefi-
in your income, you will have to get $2,000 from some ciary). The rollover rules apply to you as if you were the
other source and add it to the $8,000 you actually re- employee. You can roll over the distribution if it is an eligi-
ceived. ble rollover distribution (described earlier) and it is made
If you roll over only $8,000, you must include in your in- under a QDRO or, for the TSP, a qualifying order.
come the $2,000 not rolled over. Also, you may be subject A QDRO or qualifying order is a judgment, decree, or
to the 10% additional tax on the $2,000. order relating to payment of child support, alimony, or mar-
ital property rights. The payments must be made to a
Time for making rollover. You must generally complete spouse, former spouse, child, or other dependent of a par-
the rollover of an eligible rollover distribution paid to you by ticipant in the plan.
the 60th day following the day on which you receive the The order must contain certain information, including
distribution. the amount or percentage of the participant's benefits to
The IRS may waive the 60-day requirement where the be paid to each payee. It can't require the plan to pay ben-
failure to do so would be against equity or good con- efits in a form not offered by the plan, nor can it require the
science, such as in the event of a casualty, disaster, or plan to pay increased benefits.
other event beyond your reasonable control. There are A distribution that is paid to a child or dependent under
three ways to obtain a waiver of the 60-day requirement. a QDRO or a qualifying order is taxed to the plan partici-
• You qualify for an automatic waiver. pant.

• You self-certify that you met the requirements of a Rollovers by surviving spouse. You may be able to roll
waiver. over tax free all or part of the CSRS, FERS, or TSP distri-
• You request and receive a letter ruling under the ap- bution you receive as the surviving spouse of a deceased
propriate IRS Revenue Procedure. This Revenue Pro- employee or retiree. The rollover rules apply to you as if
cedure is generally published in the first Internal Reve- you were the employee or retiree. You can generally roll
nue Bulletin of the year. over the distribution into a qualified retirement plan or an
IRA. An amount rolled over to a Roth IRA isn't tax free un-
For more information about requesting a waiver of the
less you are rolling over amounts from Roth contributions
60-day rollover requirement, rollovers permitted between
and earnings. See Rollovers to Roth IRAs, later.

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A distribution paid to a beneficiary other than the em- is provided, as long as the following two requirements are
ployee's surviving spouse is generally not an eligible roll- met.
over distribution. However, see Rollovers by nonspouse
• You have the opportunity, for at least 30 days after the
beneficiary next.
explanation is provided, to consider whether or not
Rollovers by nonspouse beneficiary. You may be able you want to make a direct rollover.
to roll over tax free all or a portion of a distribution you re- • The information you receive clearly states that you
ceive from the CSRS, FERS, or TSP of a deceased em- have the right to have 30 days to make a decision.
ployee or retiree if you are a designated beneficiary (other
Contact the TSP or OPM if you have any questions about
than a surviving spouse) of the employee or retiree. The
this information.
distribution must be a direct trustee-to-trustee transfer to
your IRA that was set up to receive the distribution. The
transfer will be treated as an eligible rollover distribution Rollovers to Roth IRAs

and the IRA will be treated as an inherited IRA. An amount You can roll over distributions directly from the CSRS,
rolled over to a Roth IRA isn't tax free. See Rollovers to FERS, and TSP to a Roth IRA.
Roth IRAs, later. For information on inherited IRAs, see
Pub. 590-A. You must include in your gross income distributions
from the CSRS, FERS, and TSP that you would have had
How to report. On your Form 1040, 1040-SR, or to include in income if you hadn't rolled them over into a
1040-NR, report the total distributions from the CSRS, Roth IRA. You don't include in gross income any part of a
FERS, or TSP on line 5a. Report the taxable amount of the distribution that is a return of contributions that were taxa-
distributions (total distribution less the amount rolled over) ble to you when paid. In addition, the 10% tax on early dis-
on line 5b. Also, enter “Rollover” next to line 5b. tributions doesn't apply.
If the rollover was made to a Roth IRA, see Rollovers to
Roth IRAs, later, for reporting the rollover on your return. Any amount, which is from traditional TSP contributions
and earnings, rolled over to a Roth IRA is subject to the
Written explanation to recipients. The TSP or OPM same rules for converting a traditional IRA into a Roth IRA.
must provide a written explanation to you within a reason- For more information, see Converting From Any Traditional
able period of time before making an eligible rollover distri- IRA Into a Roth IRA in chapter 1 of Pub. 590-A.
bution to you. It must tell you about all of the following.
How to report. A rollover to a Roth IRA isn't a tax-free
• Your right to have the distribution paid tax free directly
distribution unless you are rolling over after-tax contribu-
to another qualified retirement plan or to a traditional
tions you made such as your Roth contributions and earn-
IRA.
ings. Report a rollover from a qualified retirement plan to a
• The requirement to withhold tax from the distribution, Roth IRA on Form 1040, 1040-SR, or 1040-NR, lines 5a
unless it is from your Roth contributions and earnings, and 5b.
if it isn't directly rolled over. Enter the total amount of the distribution before income
• The nontaxability of any part of the distribution that tax or deductions were withheld on Form 1040, 1040-SR,
you roll over within 60 days after you receive the distri- or 1040-NR, line 5a. This amount is shown in box 1 of
bution. Form 1099-R. From this amount, subtract any contribu-
tions (usually shown in box 5 of Form 1099-R) that were
• Other qualified retirement plan rules that apply, includ- taxable to you when made. From that result, subtract the
ing those for lump-sum distributions, alternate payees, amount of any qualified rollover from a designated Roth
and cash or deferred arrangements. account. Enter the remaining amount, even if zero, on
• How the distribution rules of the plan to which you roll Form 1040, 1040-SR, or 1040-NR, line 5b.
over the distribution may differ in their restrictions and If you must include any amount in your income,
tax consequences from the rules that apply to the plan ! you may have to increase your withholding or
making the distribution. CAUTION make estimated tax payments. See Pub. 505.

Note. Rollovers to Roth IRAs aren’t tax free and are inclu-
ded in income unless it is from your Roth contributions Choosing the right option. Table 1 may help you decide
and earnings. See Rollovers to Roth IRAs, later. which distribution option to choose. Carefully compare the
effects of each option.
Reasonable period of time. The TSP or OPM must
provide you with a written explanation no earlier than 90
days and no later than 30 days before the distribution is
made. However, you can choose to have the TSP or OPM
make a distribution less than 30 days after the explanation

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Table 1. Comparison of Payment to You • A section 403(b) annuity, or
Versus Direct Rollover • A section 457(b) plan.
The CSRS and FERS are considered eligible retirement
Affected Result of a Payment to Result of a Direct
plans.
Item You Rollover
You can exclude from income only the lesser of
Withholding The payer must withhold There is no
20% of the taxable part. withholding. ! the amount of the premiums paid or $3,000. This
However, you may CAUTION is true if the distribution was made to the provider
want to choose of the accident or health plan or long-term care insurance
withholding on a contract or if the distribution was made to you and then
rollover from your paid to the provider of the accident or health plan or
traditional long-term care insurance. If you received a distribution
contributions and from your eligible retirement plan, and you used part of
earnings to a Roth that distribution to pay premiums for an accident or health
IRA. plan or long-term care insurance contract, you can still ex-
Additional If you are under age 59 / , 1 2 There is no 10% clude from income only the lesser of the amount of the
tax a 10% additional tax may additional tax. See premiums or $3,000. The rest of the distribution is taxable
apply to the taxable part Tax on early to you and should be reported as described next.
(including an amount equal distributions,
to the tax withheld) that earlier. How to report. If you make this election, reduce the oth-
isn't rolled over. erwise taxable amount of your annuity by the amount ex-
When to Any taxable part (including Any taxable part cluded. The taxable annuity shown on Form CSA 1099-R
report as the taxable part of any isn't income to you doesn't reflect this exclusion. Report your total distribu-
income amount withheld) not rolled until later tions on Form 1040, 1040-SR, or 1040-NR, line 5a. Re-
over is income to you in the distributed to you port the taxable amount on Form 1040, 1040-SR, or
year paid. from the new plan 1040-NR, line 5b. Enter “PSO” next to the appropriate line
or IRA. However, on which you report the taxable amount.
see Rollovers to If you are retired on disability and reporting your disabil-
Roth IRAs, earlier, ity pension on line 1h of Form 1040, 1040-SR, or
for an exception. 1040-NR, include only the taxable amount on that line and
enter “PSO” and the amount excluded on the dotted line
next to the applicable line.
Distributions Used To Pay Insurance
Premiums for Public Safety Officers How To Report Benefits

If you are an eligible retired public safety officer (law en- If you received annuity benefits that aren't fully taxable, re-
forcement officer, firefighter, chaplain, or member of a res- port the total received for the year on Form 1040,
cue squad or ambulance crew), you can elect to exclude 1040-SR, or 1040-NR, line 5a. Also, include on that line
from income distributions made from an eligible retirement the total of any other pension plan payments (even if fully
plan that are used to pay the premiums for accident or taxable, such as those from the TSP) that you received
health insurance or long-term care insurance. You can do during the year in addition to the annuity. Report the taxa-
this only if you retired because of disability or because you ble amount of these total benefits on Form 1040,
reached normal retirement age. The premiums can be for 1040-SR, or 1040-NR, line 5b. However, if you use Form
coverage for you, your spouse, or dependents. The distri- 4972, Tax on Lump-Sum Distributions, to report the tax on
bution must be from a plan maintained by the employer any amount, don't include that amount on line 5a or 5b. In-
from which you retired as a public safety officer. The distri- stead, follow the Form 4972 instructions.
bution can be made directly from the plan to the insurance
provider of the accident or health plan or long-term care If you received only fully taxable payments from your re-
insurance contract or the distribution can be made to you tirement, the TSP, or other pension plan, report on Form
to pay to the provider of the accident or health plan or 1040, 1040-SR, or 1040-NR, line 5b, the total received for
long-term care insurance. You can exclude from income the year (except for any amount reported on Form 4972).
the lesser of the amount of the insurance premiums or No entry is required on Form 1040, 1040-SR, or 1040-NR,
$3,000. You can only make this election for amounts that line 5a.
would otherwise be included in your income. The amount
excluded from your income can't be used to claim a medi-
cal expense deduction.
For this purpose, an eligible retirement plan is a govern-
mental plan that is:
• A qualified trust,
• A section 403(a) plan,

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                                                                   Table 2. FERS Minimum Retirement Age 
Part III                                                                     (MRA) With 10 Years of Service

Rules for Disability                                               IF you were born in. . .                    THEN your MRA is. . .
                                                                   1947 or earlier   . . . . . . . . . . . .   55 years.
Retirement and                                                     1948. . . . . . . . . . . . . . . . . . .   55 years, 2 months.
Credit for the Elderly or                                          1949. . . . . . . . . . . . . . . . . . .   55 years, 4 months.
                                                                   1950. . . . . . . . . . . . . . . . . . .   55 years, 6 months.
the Disabled                                                       1951. . . . . . . . . . . . . . . . . . .   55 years, 8 months.
                                                                   1952. . . . . . . . . . . . . . . . . . .   55 years, 10 months.
This part of the publication is for federal employees and          1953 to 1964. . . . . . . . . . . . .       56 years.
retirees  who  receive  disability  benefits  under  the  CSRS,    1965. . . . . . . . . . . . . . . . . . .   56 years, 2 months.
the FERS, or other federal programs. It also explains the 
                                                                   1966. . . . . . . . . . . . . . . . . . .   56 years, 4 months.
tax credit available to certain taxpayers because of age or 
disability.                                                        1967. . . . . . . . . . . . . . . . . . .   56 years, 6 months.
                                                                   1968. . . . . . . . . . . . . . . . . . .   56 years, 8 months.
                                                                   1969. . . . . . . . . . . . . . . . . . .   56 years, 10 months.
Disability Annuity
                                                                   1970 or later   . . . . . . . . . . . . . . 57 years.
If you retired on disability, the disability annuity you receive 
from  the  CSRS  or  FERS  is  taxable  as  wages  until  you      For service as a law enforcement officer, member of the 
reach minimum retirement age, as explained in this sec-            Capitol or Supreme Court Police, firefighter, nuclear mate-
tion. However, beginning on the day after you reach      mini-     rials  courier,  or  air  traffic  controller,  the  minimum  retire-
mum retirement age, your payments are treated as a re-             ment  age  is  age  50  with  20  years  of  covered  service  or 
tirement annuity and you can begin to recover the cost of          any age with 25 years of covered service.
your  annuity  under  the  rules  discussed  earlier  in Part  II, 
                                                                   How to report.      You must report all your disability annuity 
Rules for Retirees.
                                                                   payments  received  before  minimum  retirement  age  on 
If you find that you could have started your recovery in           Form 1040, 1040-SR, or Form 1040-NR, line 1h. Disability 
an earlier year for which you have already filed a return,         annuity payments received after you reach that age are re-
you can still start your recovery of contributions in that ear-    ported as discussed under             How To Report Benefits, ear-
lier year. To do so, file an amended return for that year and      lier in Part II.
each succeeding year for which you have already filed a 
return. Generally, an amended return for any year must be          Withholding.      For  income  tax  withholding  purposes,  a 
filed within 3 years after the due date for filing your original   disability annuity is treated the same as a nondisability an-
return for that year.                                              nuity. This treatment also applies to disability payments re-
                                                                   ceived before minimum retirement age even though these 
Minimum retirement age. This is the age at which you               payments  are  shown  as  wages  on  your  return.  See          Tax 
could first receive an annuity were you not disabled. This         Withholding and Estimated Tax in Part I.
is generally based on your age and length of service.
Retirement under the Civil Service Retirement Sys-                 Other Benefits
tem (CSRS). In most cases, under the CSRS, the mini-
                                                                   The tax treatment of certain other benefits is explained in 
mum combinations of age and service for retirement are:
                                                                   this section.
• Age 55 with 30 years of service;
                                                                   Federal  Employees'  Compensation  Act  (FECA). 
• Age 60 with 20 years of service;
                                                                   FECA payments you receive for personal injuries or sick-
• Age 62 with 5 years of service; or                               ness resulting from the performance of your duties are like 
• For service as a law enforcement officer, firefighter,           workers'  compensation.  They  are  tax  exempt  and  aren't 
  nuclear materials courier, or air traffic controller, age        treated  as  disability  income  or  annuities.  However,  pay-
  50 with 20 years of covered service.                             ments you receive while your claim is being processed, in-
                                                                   cluding pay while on sick leave and continuation of pay for 
Retirement  under  the  Federal  Employees  Retire-                up to 45 days, are taxable.
ment System (FERS).   In most cases, the minimum age 
for retirement under the FERS is between ages 55 and 57            Sick pay or disability payments repaid.              If you repay 
with at least 10 years of service. With at least 5 years of        sick leave or disability annuity payments you received and 
service, your minimum retirement age is age 62. Your min-          included in income in an earlier year to be eligible for non-
imum  retirement  age  with  at  least  10  years  of  service  is taxable FECA benefits for that period, you can’t deduct the 
shown in Table 2.                                                  amount you repay.
                                                                   If you repay sick leave or disability annuity payments in 
                                                                   the same year you receive them, the repayment reduces 
                                                                   your taxable sick leave pay or disability annuity.

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Terrorist attack. Disability payments for injuries incurred over a reasonable period of time while working for pay or
as a direct result of a terrorist attack directed against the profit, or in work generally done for pay or profit.
United States (or its allies) aren't included in income. For
more information about payments to survivors of terrorist Physician's statement. If you are under age 65, you
attacks, see Pub. 3920, Tax Relief for Victims of Terrorist must have your physician complete a statement certifying
Attacks. that you were permanently and totally disabled on the
date you retired. You must keep this statement for your tax
Military actions. Disability payments for injuries incurred records. For this purpose, you can use the Physician's
as a direct result of a military action involving the Armed Statement in the Instructions for Schedule R (Form 1040).
Forces of the United States and resulting from actual or
threatened violence or aggression against the United Mandatory retirement age. This is the age set by your
States or any of its allies aren't included in income. employer at which you would have had to retire if you
hadn't become disabled. There is no mandatory retire-
Disability resulting from military service injuries. If ment age for most federal employees. However, there is a
you received tax-exempt benefits from the Department of mandatory retirement age for the following federal employ-
Veterans Affairs for personal injuries resulting from active ees.
service in the U.S. Armed Forces and later receive a Air traffic controllers appointed after May 15, 1972, by
•
CSRS or FERS disability annuity for disability arising from the Department of Transportation or the Department of
the same injuries, you can't treat the disability annuity pay- Defense must generally retire by the last day of the
ments as tax-exempt income. They are subject to the rules month when they reach age 56.
described earlier under Disability Annuity.
• Federal firefighters, law enforcement officers, nuclear
Payment for unused annual leave. If you retire on disa- materials couriers, or members of the Capitol or Su-
bility, any payment for your unused annual leave is taxed preme Court Police who are otherwise eligible for im-
as wages in the tax year you receive the payment. mediate retirement must generally retire by the last
day of the month they reach age 57 or, if later, com-
Credit for the Elderly or the Disabled plete 20 years of service.

You can take the credit for the elderly or the disabled if: Figuring the credit. If you figure the credit yourself, first
fill out the front of Schedule R (Form 1040). Next, fill out
• You are a qualified individual, and Part III of the schedule.
• Your income isn't more than certain limits. If you want the IRS to figure your tax and credits, includ-
ing the credit for the elderly or the disabled, see the In-
You are a qualified individual for this credit if you are a structions for Schedule R (Form 1040).
U.S. citizen or resident alien and, at the end of the tax
year, you are: More information. For detailed information about this
1. Age 65 or older; or credit, see Pub. 524, Credit for the Elderly or the Disabled.

2. Under age 65, retired on permanent and total disabil-
ity, and:
Part IV
a. Received taxable disability income, and
Rules for Survivors
b. Didn't reach mandatory retirement age (defined
later) before the tax year. of Federal Employees
You are retired on permanent and total disability if:
This part of the publication is for survivors of federal em-
• You were permanently and totally disabled when you ployees. It explains how to treat amounts you receive be-
retired, and cause of the employee's death. If you are the survivor of a
• You retired on disability before the close of the tax federal retiree, see Part V.
year.
Employee earnings. Salary or wages earned by a fed-
Even if you don't retire formally, you may be considered eral employee but paid to the employee's survivor or ben-
retired on disability when you have stopped working be- eficiary after the employee's death are income in respect
cause of your disability. of the decedent. This income is taxable to the survivor or
beneficiary. This treatment also applies to payments for
Permanently and totally disabled. You are perma- accrued annual leave.
nently and totally disabled if you can't engage in any sub-
stantial gainful activity because of your physical or mental Dependents of public safety officers. The Public
condition. A physician must certify that the condition has Safety Officers' Benefits program, administered through
lasted or can be expected to last continuously for 12 the Bureau of Justice Assistance (BJA), provides a
months or more, or that the condition can be expected to tax-free death benefit to eligible survivors of public safety
result in death. See Physician's statement, next. Substan- officers whose death is the direct and proximate result of a
tial gainful activity is the performance of significant duties traumatic injury sustained in the line of duty. The death

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benefit isn't includible in the decedent's gross estate for CSRS or FERS Survivor Annuity
federal estate tax purposes or the survivor's gross income
for federal income tax purposes. If you receive a CSRS or FERS survivor annuity, you can
A public safety officer is a law enforcement officer, fire- recover the employee's cost tax free. The employee's cost
fighter, or member of a public rescue squad or ambulance is the total of the retirement plan contributions that were
crew. In certain circumstances, a chaplain killed in the line taken out of their pay.
of duty is also a public safety officer. The chaplain must
have been responding to a fire, rescue, or police emer- How you figure the tax-free recovery of the cost de-
gency as a member or employee of a fire or police depart- pends on your annuity starting date. This is the day after
ment. the date of the employee's death. The methods to use are
This program can pay survivors an emergency interim the same as those described near the beginning of Part II
benefit of up to $3,000 if it finds that the death of the pub- under Recovering your cost tax free.
lic safety officer is one for which a final benefit will proba- The following discussions cover only the Simplified
bly be paid. If there is no final payment, the recipient of the Method. You can use this method if your annuity starting
interim benefit is liable for repayment. However, the BJA date is after July 1, 1986. You must use this method if your
may not require all or part of the repayment if it will cause annuity starting date is after November 18, 1996. Under
a hardship. If that happens, that amount is tax free. the Simplified Method, each of your monthly annuity pay-
Additional information about this program is avail- ments is made up of two parts: the tax-free part that is a
able on the BJA website at BJA.gov. return of the employee's cost and the taxable part that is
the amount of each payment that is more than the part
that represents the employee's cost. The tax-free part re-
For more information on this program, you may mains the same, even if your annuity is increased. How-
also contact the BJA by calling 1-888-744-6513. ever, see Exclusion limit, later.

Surviving spouse with no children receiving annui-
FERS Death Benefit ties. Under the Simplified Method, you figure the tax-free
part of each full monthly annuity payment by dividing the
You may be entitled to a special FERS death benefit if you employee's cost by a number of months based on your
were the spouse of an active FERS employee who died age. This number will differ depending on whether your
after at least 18 months of federal service. At your option, annuity starting date is before November 19, 1996, or after
you can take the benefit in the form of a single payment or November 18, 1996. To use the Simplified Method, com-
in the form of a special annuity payable over a 3-year pe- plete Worksheet A. Specific instructions for Worksheet A
riod. are given in Part II under Simplified Method.

The tax treatment of the special death benefit depends Example. Diane Green, age 48, began receiving a
on the option you choose and whether a FERS survivor $1,500 monthly CSRS annuity in March 2023 upon the
annuity is also paid. death of her husband. Her husband was a federal em-
If you choose the single payment option, use the follow- ployee when he died. She received 10 payments in 2023.
ing rules. Her husband had contributed $36,000 to the retirement
• If a FERS survivor annuity isn't paid, at least part of plan.
the special death benefit is tax free. The tax-free part Diane must use the Simplified Method. Her completed
is an amount equal to the employee's FERS contribu- Worksheet A is shown later. To complete line 3, she used
tions. Table 1 at the bottom of the worksheet and found that 360
is the number in the last column opposite the age range
• If a FERS survivor annuity is also paid, all of the spe- that includes her age. Diane keeps a copy of the comple-
cial death benefit is taxable. You can't allocate any of ted worksheet for her records. It will help her figure her
the employee's FERS contributions to the special taxable annuity in later years.
death benefit. Diane's tax-free monthly amount is $100 (line 4 of her
If you choose the 3-year annuity option, at least part of worksheet). If she lives to collect more than 360 pay-
each monthly payment is tax free. Use the following rules. ments, the payments after the 360th will be fully taxable. If
• If a FERS survivor annuity isn't paid, the tax-free part she dies before 360 payments have been made, an “Other
of each monthly payment is an amount equal to the Itemized Deduction” will be allowed for the unrecovered
employee's FERS contributions divided by 36. cost on her final income tax return.

• If a FERS survivor annuity is also paid, allocate the Surviving spouse with child. If the survivor benefits in-
employee's FERS contributions between the 3-year clude both a life annuity for the surviving spouse and one
annuity and the survivor annuity. Make the allocation or more temporary annuities for the employee's children,
in the same proportion that the expected return from an additional step is needed under the Simplified Method
each annuity bears to the total expected return from to allocate the monthly exclusion among the beneficiaries
both annuities. Divide the amount allocated to the correctly.
3-year annuity by 36. The result is the tax-free part of Figure the total monthly exclusion for all beneficiaries
each monthly payment of the 3-year annuity. by completing lines 2 through 4 of Worksheet A as if only

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Worksheet A. Simplified Method for Diane Green                                                        Keep for Your Records
See the instructions in Part II of this publication under Simplified Method.
1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, 
   1040-SR, or 1040-NR, line 5a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                1.  $ 15,000
2. Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion.  See * Your cost in Part II, 
   Rules for Retirees, earlier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.    36,000
   Note. If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 
   and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or 
   annuity has changed). Otherwise, go to line 3.
3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the 
   payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below . . . . .                                                        3.    360
4. Divide line 2 by the number on line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 4.    100
5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date 
   was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go 
   to line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.    1,000
6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of 
   your worksheet for last year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            6.    0
7. Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         7.    36,000
8. Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               8.    1,000
9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this 
   amount to the total for Form 1040 or 1040-SR, line 5b. If you are a nonresident alien, enter this amount on line 1 
   of Worksheet C. If your Form CSA 1099-R or Form CSF 1099-R shows a larger amount, use the amount figured 
   on this line instead. If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums 
   for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 . . . . . . .                                                   9.  $ 14,000
10. Was your annuity starting date before 1987? 
         STOP
      Yes.      Don't complete the rest of this worksheet.
    
     No. Add lines 6 and 8. This is the amount you have recovered tax free through 2023. You will need this 
   number if you need to fill out this worksheet next year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         10.   1,000
11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you will not have to complete this 
   worksheet next year. The payments you receive next year will generally be fully taxable . . . . . . . . . . . . . . . . . .                                               11. $ 35,000

                                                 Table 1 for Line 3 Above
                                                                         AND your annuity starting date was—
   IF your age on your                                     before November 19, 1996,                  after November 18, 1996, 
   annuity starting date was . . .                         THEN enter on line 3 . . .                 THEN enter on line 3 . . .
   55 or under                                                           300                                                                                                 360
   56–60                                                                 260                                                                                                 310
   61–65                                                                 240                                                                                                 260
   66–70                                                                 170                                                                                                 210
   71 or over                                                            120                                                                                                 160
                                                 Table 2 for Line 3 Above
   IF the annuitants' combined 
   ages on your annuity starting 
   date were . . .                                         THEN enter on line 3 . . .
   110 or under                                                          410
   111–120                                                               360
   121–130                                                               310
   131–140                                                               260
   141 or over                                                           210

* A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died 
before August 21, 1996.

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the surviving spouse received an annuity. Then, to figure monthly exclusion. (However, the monthly exclusion can't
the monthly exclusion for each beneficiary, multiply line 4 be more than the monthly annuity payment. You can carry
of the worksheet by a fraction. For any beneficiary, the nu- over unused exclusion amounts to apply against future an-
merator of the fraction is that beneficiary's monthly annu- nuity payments.)
ity, and the denominator is the total of the monthly annuity
More than one child. If there is more than one child
payments to all the beneficiaries.
entitled to a temporary annuity (and no surviving spouse
The temporary annuity is payable to the child until the
annuity), divide the cost by the number of months of pay-
child reaches a specified age in the plan, which can't be
ments until the date the youngest child will reach age 22.
older than 25. The ending of a child's temporary annuity
This monthly exclusion must then be allocated among the
doesn't affect the total monthly exclusion figured under the
children in proportion to their monthly annuity payments,
Simplified Method. The total exclusion merely needs to be
like the exclusion shown in the previous example.
reallocated at that time among the remaining beneficia-
ries. If only the surviving spouse is left drawing an annuity, Disabled child. If a child otherwise entitled to a tem-
the surviving spouse is entitled to the entire monthly exclu- porary annuity was permanently disabled at the annuity
sion as figured in the worksheet. starting date (and there is no surviving spouse annuity),
that child is treated for tax purposes as receiving a lifetime
Example. The facts are the same as in the example for annuity, like a surviving spouse. The child must complete
Diane Green in the preceding discussion, except that the line 3 of Worksheet A using a number in Table 1 at the bot-
Greens had a son, Robert, who was age 15 at the time of tom of the worksheet corresponding to the child's age at
his father's death. Robert is entitled to a $500-per-month the annuity starting date. If more than one child is entitled
temporary annuity until he reaches age 18 (age 22, if he to a temporary annuity, an allocation like the one shown
remains a full-time student and doesn't marry), as speci- under Surviving spouse with child, earlier, must be made
fied by the plan. to determine each child's share of the exclusion.
In completing Worksheet A (not shown), Diane fills out
the entries through line 4 exactly as shown in the filled-in Exclusion limit. If your annuity starting date is after
worksheet for the earlier example. That is, she includes on 1986, the most that can be recovered tax free is the cost
line 1 only the amount of the annuity she herself received of the annuity. Once the total of your exclusions equals the
and she uses on line 3 the 360 factor for her age. After ar- cost, your entire annuity is taxable. If your annuity starting
riving at the $100 monthly exclusion on line 4, however, date is before 1987, the tax-free part of each whole
Diane allocates it between her own annuity and that of her monthly payment remains the same each year you receive
son. payments—even if you outlive the number of months used
To find how much of the monthly exclusion to allocate to on line 3 of the Simplified Method Worksheet. The total
her own annuity, Diane multiplies the $100 monthly exclu- exclusion may be more than the cost of the annuity.
sion by the fraction $1,500 (her monthly annuity) over
$2,000 (the total of her $1,500 and Robert's $500 annui- Deduction of unrecovered cost. If the annuity starting
ties). She enters the result, $75, just below the entry date is after July 1, 1986, and the annuitant's death occurs
space for line 4. She completes the worksheet by entering before all the cost is recovered tax free, the unrecovered
$750 on lines 5 and 8, and $14,250 on line 9. cost can be claimed as an “Other Itemized Deduction” for
A second Worksheet A (not shown) is completed for the annuitant's last tax year.
Robert's annuity. On line 1, he enters $5,000 as the total
annuity received. Lines 2, 3, and 4 are the same as those Survivors of Slain Public Safety Officers
on his mother's worksheet. In allocating the $100 monthly
exclusion on line 4 to his annuity, Robert multiplies it by Generally, if you receive survivor annuity payments as the
the fraction $500 over $2,000. His resulting monthly exclu- spouse, former spouse, or child of a public safety officer
sion is $25. His exclusion for the year (line 8) is $250, and killed in the line of duty, you can exclude the payments
his taxable annuity for the year (line 9) is $4,750. from your income. The annuity is excludable to the extent
Diane and Robert only need to complete lines 10 and that it is due to the officer's service as a public safety offi-
11 on a single worksheet to keep track of their unrecov- cer. Public safety officers include law enforcement offi-
ered cost for next year. These lines are exactly as shown cers, firefighters, chaplains, ambulance crew members,
in the filled-in Worksheet A for the earlier example. and rescue squad members. The provision applies to a
When Robert's temporary annuity ends, the computa- chaplain killed in the line of duty after September 10,
tion of the total monthly exclusion will not change. The 2001. The chaplain must have been responding to a fire,
only difference will be that Diane will then claim the full ex- rescue, or police emergency as a member or employee of
clusion against her annuity alone. a fire or police department.

Surviving child only. A method similar to the Simplified The exclusion doesn't apply if your actions were a sub-
Method can also be used to figure the taxable and nontax- stantial contributing factor to the death of the officer. It also
able parts of a temporary annuity for a surviving child doesn't apply if:
when there is no surviving spouse annuity. To use this
method, divide the deceased employee's cost by the num- • The death was caused by the intentional misconduct
ber of months from the child's annuity starting date until of the officer or by the officer's intention to cause their
the date the child will reach age 22. The result is the own death,

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• The officer was voluntarily intoxicated at the time of Worksheet D. Lump-Sum Payment
death, or at End of Survivor
• The officer was performing their duties in a grossly Annuity
negligent manner at the time of death. Keep for Your Records
The special death benefit paid to the spouse of a 1. Enter the lump-sum payment . . . . . . 1.
! FERS employee (see FERS Death Benefit, ear- 2. Enter the amount of annuity previously
CAUTION lier) isn't eligible for this exclusion.
received tax free . . . . . . . . . . . . . . . . . 2.
3. Add lines 1 and 2 . . . . . . . . . . . . . . . . 3.
Lump-Sum CSRS or FERS Payment 4. Enter the employee's total cost . . . . . 4.
If a federal employee dies before retiring and leaves no 5. Taxable amount. Subtract line 4 from
one eligible for a survivor annuity, the estate or other ben- line 3. Enter the result, but not less
eficiary will receive a lump-sum payment from the CSRS than zero . . . . . . . . . . . . . . . . . . . . . . . 5.

or FERS. This single payment is made up of the regular The taxable amount, if any, generally can't be rolled
contributions to the retirement fund plus accrued interest, over into an IRA or other plan and is subject to federal in-
if any, to the extent not already paid to the employee. come tax withholding at a 10% rate. However, a non-
The beneficiary is taxed, in the year the lump sum is spousal beneficiary making a transfer described under
distributed or made available, only on the amount of any Rollovers by nonspouse beneficiary under Rollover Rules
accrued interest. The taxable amount, if any, generally in Part II can roll over any taxable amount. In addition, the
can't be rolled over into an IRA or other plan and is subject payment may qualify as a lump-sum distribution eligible
to federal income tax withholding at a 10% rate. However, for capital gain treatment or the 10-year tax option if the
a nonspousal beneficiary making a transfer described un- plan participant was born before January 2, 1936. If the
der Rollovers by nonspouse beneficiary under Rollover beneficiary also receives a lump-sum payment of unrecov-
Rules in Part II can roll over any taxable amount. In addi- ered voluntary contributions plus interest, this treatment
tion, the payment may qualify as a lump-sum distribution applies only if the payment is received within the same tax
eligible for capital gain treatment or the 10-year tax option year. For more information, see Lump-Sum Distributions in
if the plan participant was born before January 2, 1936. If Pub. 575.
the beneficiary also receives a lump-sum payment of un-
recovered voluntary contributions plus interest, this treat- Example. At the time of your brother's death in De-
ment applies only if the payment is received within the cember 2022, he was employed by the federal govern-
same tax year. For more information, see Lump-Sum Dis- ment and had contributed $45,000 to the CSRS. His sur-
tributions in Pub. 575. viving spouse received $6,600 in survivor annuity
payments before she died in 2023. She had used the Sim-
Lump-sum payment at end of survivor annuity. If an plified Method for reporting her annuity and properly ex-
annuity is paid to the federal employee's survivor and the cluded $1,000 from gross income.
survivor annuity ends before an amount equal to the de- Only $6,600 of the guaranteed amount of $45,000
ceased employee's contributions plus any interest has (your brother's contributions) was paid as an annuity, so
been paid out, the rest of the contributions plus any inter- the balance of $38,400 was paid to you in a lump sum as
est will be paid in a lump sum to the employee's estate or your brother's sole beneficiary. You figure the taxable
other beneficiary. Generally, this beneficiary will not have amount of this payment as follows.
to include any of the lump sum in gross income because,
when it is added to the amount of the annuity previously Worksheet D. Lump-Sum Payment
received that was excludable, it will still be less than the at End of Survivor
employee's total contributions. Annuity—Example
Any unrecovered cost is allowed as an “Other Itemized
Keep for Your Records
Deduction” on the final return of the annuitant.
To figure the taxable amount, if any, use Worksheet D. 1. Enter the lump-sum payment . . . . . . 1. $ 38,400
2. Enter the amount of annuity previously
received tax free . . . . . . . . . . . . . . . . . 2. 1,000
3. Add lines 1 and 2 . . . . . . . . . . . . . . . . 3. 39,400
4. Enter the employee's total cost . . . . . 4. 45,000
5. Taxable amount. Subtract line 4 from
line 3. Enter the result, but not less
than zero . . . . . . . . . . . . . . . . . . . . . . . 5. 0

Voluntary contributions. If a CSRS employee dies be-
fore retiring from government service, voluntary contribu-
tions to the retirement fund can't be used to provide an

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additional annuity to the survivors. Instead, the voluntary lier, for a discussion of the conditions. For more informa-
contributions plus any accrued interest will be paid in a tion on beneficiary participant accounts, see the TSP pub-
lump sum to the estate or other beneficiary. The benefi- lication Your TSP Account: A Guide for Beneficiary
ciary must generally include any interest received in in- Participants, available on the TSP website at TSP.gov/
come for the year distributed or made available. However, forms.
if the beneficiary is the employee's surviving spouse (or
If you receive a payment from a uniformed serv-
someone other than the employee's spouse making a
ices TSP account that includes contributions from
transfer described under Rollovers by nonspouse benefi- CAUTION!
combat pay, see Uniformed services Thrift Sav-
ciary under Rollover Rules in Part II), the interest can be
ings Plan (TSP) accounts under Reminders near the be-
rolled over. See also Rollovers by surviving spouse under
ginning of this publication.
Rollover Rules in Part II.
The interest, if not rolled over, is generally subject to
federal income tax withholding at a 20% rate (or 10% rate Federal Estate Tax
if the beneficiary isn't the employee's surviving spouse). It
may qualify as a lump-sum distribution eligible for capital Form 706, United States Estate (and Generation-Skipping
gain treatment or the 10-year tax option if: Transfer) Tax Return, must be filed for the estate of a citi-
zen or resident alien of the United States who died in 2023
• The plan participant was born before January 2, 1936;
if the gross estate is more than $12,920,000. Included in
• Regular annuity benefits can't be paid under the retire- this $12,920,000 are any adjusted taxable gifts made by
ment system; and the decedent after 1976 and the specific exemption al-
• The beneficiary also receives a lump-sum payment of lowed for gifts by the decedent after September 8, 1976,
the regular contributions plus interest within the same and before 1977.
tax year as the voluntary contributions. The gross estate generally includes the value of all
For more information, see Lump-Sum Distributions in property beneficially owned by the decedent at the time of
Pub. 575. death. Examples of property included in the gross estate
are salary or annuity payments that had accrued to an em-
ployee or retiree, but which weren't paid before death, and
Thrift Savings Plan (TSP)
the balance in the decedent's TSP account.
The payment you receive as the beneficiary of a dece- The gross estate also usually includes the value of the
dent's TSP account is fully taxable except for the portion death and survivor benefits payable under the CSRS or
that is from Roth contributions and earnings if certain con- the FERS. If the federal employee died leaving no one eli-
ditions are met. See Roth TSP balance, earlier. However, gible to receive a survivor annuity, the lump sum (repre-
if you are the decedent's surviving spouse (or someone senting the employee's contribution to the retirement sys-
other than the employee's spouse making a transfer de- tem plus any accrued interest) payable to the estate or
scribed under Rollovers by nonspouse beneficiary under other beneficiary is included in the employee's gross es-
Rollover Rules in Part II), you can generally roll over the tate.
payment tax free. If you don't choose a direct rollover of
the decedent's TSP account, mandatory 20% income tax Marital deduction. The estate tax marital deduction is a
withholding will apply unless it is from Roth contributions. deduction from the gross estate of the value of property
See Roth TSP balance, earlier. For more information, see that is included in the gross estate but that passes, or has
Rollover Rules in Part II. If you are neither the surviving passed, to the surviving spouse. Generally, there is no
spouse nor someone other than the employee's spouse limit on the amount of the marital deduction. Community
making a transfer described above, the payment isn't eligi- property passing to the surviving spouse qualifies for the
ble for rollover treatment. The TSP will withhold 10% of the marital deduction.
payment for federal income tax, unless you gave the TSP
a Form W-4R to choose not to have tax withheld. More information. For more information, see Pub. 559,
Survivors, Executors, and Administrators.
If the entire TSP account balance is paid to the benefi-
ciaries in the same calendar year, it may qualify as a
lump-sum distribution eligible for the 10-year tax option if Part V
the plan participant was born before January 2, 1936. See
Lump-Sum Distributions in Pub. 575 for details. Also, see Rules for Survivors
the TSP publication Tax Rules about TSP payments, avail-
able on the TSP website at TSP.gov/forms. of Federal Retirees

Beneficiary participant account. A beneficiary partici- This part of the publication is for survivors of federal retir-
pant account will be established for a spouse beneficiary. ees. It explains how to treat amounts you receive because
The money in the account isn't subject to federal income of the retiree's death. If you are the survivor of a federal
tax until it is withdrawn. However, the portion that is from employee, see Part IV.
Roth contributions and earnings, if certain conditions are
met, will not be subject to tax. See Roth TSP balance, ear-

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Decedent's retirement benefits. Retirement benefits fraction is the total of the monthly annuity payments to all
accrued and payable to a CSRS or FERS retiree before the beneficiaries.
death, but paid to you as a survivor, are taxable in the
same manner and to the same extent these benefits Example. John retired in 2021 and began receiving a
would have been taxable had the retiree lived to receive $1,147 per month CSRS retirement annuity with a survivor
them. annuity payable to his wife, Kate, upon his death. He re-
ported his annuity using the Simplified Method. Under that
method, $150 of each payment he received was a tax-free
CSRS or FERS Survivor Annuity recovery of his $45,000 cost. John received a total of 22
CSRS or FERS annuity payments you receive as the sur- monthly payments and recovered $3,300 of his cost tax
vivor of a federal retiree are fully or partly taxable under ei- free before his death in 2023. At John's death, Kate began
ther the General Rule or the Simplified Method. receiving an annuity of $840 per month and their children,
Sam and Lou, began receiving temporary annuities of
Cost recovered. If the retiree reported the annuity under $330 each per month. Kate must allocate the $150
the 3-Year Rule and recovered all of the cost tax free, your tax-free monthly amount among the three annuities.
survivor annuity payments are fully taxable. This is also To find how much of the monthly exclusion to allocate to
true if the retiree had an annuity starting date after 1986, her own annuity, Kate multiplies the $150 tax-free monthly
reported the annuity under the General Rule or the Simpli- amount by the fraction $840 (her monthly annuity) over
fied Method, and had fully recovered the cost tax free. $1,500 (the total of her $840, Sam's $330, and Lou's $330
monthly annuities). Her resulting monthly exclusion is $84.
General Rule. If the retiree was reporting the annuity un- In allocating the $150 monthly exclusion to each child's
der the General Rule, figure the tax-free part of the annuity annuity, the $150 is multiplied by the fraction $330 (each
using the same exclusion percentage that the retiree child's monthly annuity) over $1,500. Each child's resulting
used. Apply the exclusion percentage to the amount monthly exclusion is $33.
specified as your survivor annuity at the retiree's annuity Beginning with the month in which either child is no lon-
starting date. Don't apply the exclusion percentage to any ger eligible for an annuity, as specified in the plan, Kate
cost-of-living increases made after that date. Those in- will reallocate the $150 monthly exclusion to her own an-
creases are fully taxable. For more information about the nuity by multiplying the $150 by the fraction $840 over
General Rule, see Pub. 939. $1,170 (the total of her $840 and her other child's $330
monthly annuities). Her resulting monthly exclusion is
Simplified Method. If the retiree was reporting the annu- $108. In reallocating the $150 monthly exclusion to the
ity under the Simplified Method, your tax-free monthly other child's annuity, the $150 is multiplied by the fraction
amount is the same as the retiree's monthly exclusion $330 over $1,170. The other child's resulting monthly ex-
(Worksheet A, line 4). This amount remains fixed even if clusion is $42.
the monthly payment is increased or decreased. A
cost-of-living increase in your survivor annuity payments Surviving child only. If the survivor benefits include only
doesn't change the amount you can exclude from gross in- a temporary annuity for the retiree's child, allocate the un-
come. recovered cost over the number of months from the date
the annuity started until the child reaches age 22. If more
Exclusion limit. If the retiree's annuity starting date was than one temporary annuity is paid, allocate the cost over
before 1987, you can exclude the tax-free amount from all the number of months until the youngest child reaches
the annuity payments you receive. This includes any pay- age 22, and allocate the tax-free monthly amount among
ments received after you recover the cost tax free. the annuities in proportion to the monthly annuity pay-
If the retiree's annuity starting date is after 1986, you ments.
can exclude the tax-free amount only until you recover the
cost tax free. The annuity payments you receive after you
recover the annuity cost tax free are fully taxable. Lump-Sum CSRS or FERS Payment

Deduction of unrecovered cost. If the annuity starting If a deceased retiree has no beneficiary eligible to receive
date is after July 1, 1986, and the survivor annuitant's a survivor annuity, and the deceased retiree's annuity
death occurs before all the cost is recovered tax free, the ends before an amount equal to the deceased retiree's
unrecovered cost can be claimed as an “Other Itemized contributions plus any interest has been paid out, the rest
Deduction” for the annuitant's last tax year. of the contributions plus any interest will be paid in a lump
sum to the estate or other beneficiary. The estate or other
Surviving spouse with child. If the survivor benefits in- beneficiary will rarely have to include any part of the lump
clude both a life annuity for the surviving spouse and one sum in gross income. The taxable amount is figured by us-
or more temporary annuities for the retiree's children, the ing Worksheet E.
tax-free monthly amount that would otherwise apply to the
life annuity must be allocated among the beneficiaries. To
figure the tax-free monthly amount for each beneficiary,
multiply it by a fraction. The numerator of the fraction is the
beneficiary's monthly annuity, and the denominator of the

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Worksheet E. Lump-Sum Payment at the otherwise taxable payment tax free. If you don't
End of Retiree's choose a direct rollover of the TSP account, mandatory
Annuity (With No 20% federal income tax withholding will apply unless it is
from Roth contributions. See Roth TSP balance, earlier.
Survivor Annuity)
For more information, see Rollover Rules in Part II. If you
Keep for Your Records are neither the surviving spouse nor someone other than
1. Enter the lump-sum payment . . . . . . 1. the retiree's spouse making a transfer described above,
the payment isn't eligible for rollover treatment. The TSP
2. Enter the amount of annuity received
tax free by the retiree . . . . . . . . . . . . . 2. will withhold 10% of the payment for federal income tax,
unless you gave the TSP a Form W-4R to choose not to
3. Add lines 1 and 2 . . . . . . . . . . . . . . . . 3. have tax withheld.
4. Enter the total cost . . . . . . . . . . . . . . . 4.
If the retiree chose to receive their account balance as
5. Taxable amount. Subtract line 4 from an annuity, the payments you receive as the retiree's survi-
line 3. Enter the result, but not less vor are fully taxable when you receive them, whether they
than zero . . . . . . . . . . . . . . . . . . . . . . . 5.
are received as annuity payments or as a cash refund of
The taxable amount, if any, generally can't be rolled the remaining value of the amount used to purchase the
over into an IRA or other plan and is subject to federal in- annuity. However, the portion that is from Roth contribu-
come tax withholding at a 10% rate. However, a non- tions and earnings, if certain conditions are met, will not
spousal beneficiary making a transfer described under be subject to tax. See Roth TSP balance, earlier.

Rollovers by nonspouse beneficiary under Rollover Rules Beneficiary participant account. A beneficiary partici-
in Part II can roll over any taxable amount. In addition, the pant account will be established for a spouse beneficiary.
payment may qualify as a lump-sum distribution eligible The money in the account isn't subject to federal income
for capital gain treatment or the 10-year tax option if the tax until it is withdrawn. The portion withdrawn that is from
plan participant was born before January 2, 1936. If the Roth contributions and earnings, if certain conditions are
beneficiary also receives a lump-sum payment of unrecov- met, will not be subject to tax. See Roth TSP balance , ear-
ered voluntary contributions plus interest, this treatment lier, for a discussion of the conditions. For more informa-
applies only if the payment is received within the same tax tion on beneficiary participant accounts, see the TSP pub-
year. For more information, see Lump-Sum Distributions in lication Your TSP Account: A guide for Beneficiary
Pub. 575. Participants, available on the TSP website at TSP.gov/
forms.
Voluntary Contributions
If you receive a payment from a uniformed serv-
If you receive an additional survivor annuity benefit from ! ices TSP account that includes contributions from
voluntary contributions to the CSRS, treat it separately CAUTION combat pay, see Uniformed services Thrift Sav-
from the annuity that comes from regular contributions. ings Plan (TSP) accounts under Reminders near the be-
Each year, you will receive a Form CSF 1099-R that will ginning of this publication.
show how much of your total annuity received in the past
year was from each type of benefit.
Federal Estate Tax
Figure the taxable and tax-free parts of your additional
survivor annuity benefit from voluntary contributions using A federal estate tax return may have to be filed for the es-
the same rules that apply to regular CSRS and FERS sur- tate of the retired employee. See Federal Estate Tax in
vivor annuities, as explained earlier under CSRS or FERS Part IV.
Survivor Annuity.
Income Tax Deduction for Estate Tax
Lump-sum payment. Figure the taxable amount, if any,
of a lump-sum payment of the retiree's unrecovered volun- Paid
tary contributions plus any interest using the rules that ap-
Any income that a decedent had a right to receive and
ply to regular lump-sum CSRS or FERS payments, as ex-
could have received had death not occurred and that
plained earlier under Lump-Sum CSRS or FERS Payment.
wasn't properly includible in the decedent's final income
tax return is treated as income in respect of a decedent.
Thrift Savings Plan (TSP) This includes retirement benefits accrued and payable to
a retiree before death, but paid to you as a survivor.
If you receive a payment from the TSP account of a de-
ceased federal retiree, the payment is fully taxable except If the federal estate tax was paid on the decedent's es-
for the portion that is from Roth contributions and earnings tate and you are required to include income in respect of a
if certain conditions are met. See Roth TSP balance, ear- decedent in your gross income for any tax year, you can
lier. However, if you are the retiree's surviving spouse (or deduct the portion of the federal estate tax that is from the
someone other than the retiree's spouse making a transfer inclusion in the estate of the right to receive that amount.
described under Rollovers by nonspouse beneficiary For this purpose, if the decedent died after the annuity
under Rollover Rules in Part II), you can generally roll over starting date, the taxable portion of a survivor annuity you

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receive (other than a temporary annuity for a child) is con- For more information, see Income in Respect of a De-
sidered income in respect of a decedent.                     cedent in Pub. 559.

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Worksheets A and B

This section contains blank Worksheets A and B for you to 
use for your own calculations.

Worksheet A. Simplified Method                                                                                 Keep for Your Records
See the instructions in Part II of this publication under Simplified Method.

1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, 
    1040-SR, or 1040-NR, line 5a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1.   
2. Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion.  See * Your cost in Part II, Rules 
    for Retirees, earlier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.   
    Note. If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and 
    enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has 
    changed). Otherwise, go to line 3.
3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the payments are 
    for your life and that of your beneficiary, enter the appropriate number from Table 2 below . . . . . . . . . . . . . . . . . . . . .                                 3.   
4. Divide line 2 by the number on line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          4.   
5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date was 
    before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go to line 6 . . . . . . . . . . . .                                       5.   
6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of your 
    worksheet for last year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6.   
7. Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7.   
8. Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        8.   
9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this amount to 
    the total for Form 1040 or 1040-SR, line 5b. If you are a nonresident alien, enter this amount on line 1 of Worksheet C. If 
    your Form CSA 1099-R or Form CSF 1099-R shows a larger amount, use the amount figured on this line instead. If you 
    are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II 
    before entering an amount on your tax return or Worksheet C, line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         9.
10. Was your annuity starting date before 1987? 
          STOP
     Yes.         Don't complete the rest of this worksheet.
     
     No. Add lines 6 and 8. This is the amount you have recovered tax free through 2023. You will need this number if 
    you need to fill out this worksheet next year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           10.  
11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you will not have to complete this worksheet 
    next year. The payments you receive next year will generally be fully taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           11.

                                                            Table 1 for Line 3 Above
                                                                                    AND your annuity starting date was—
    IF your age on your annuity                             before November 19, 1996,                          after November 18, 1996, 
    starting date was . . .                                 THEN enter on line 3 . . .                         THEN enter on line 3 . . .
    55 or under                                                                     300                                                                                   360
    56–60                                                                           260                                                                                   310
    61–65                                                                           240                                                                                   260
    66–70                                                                           170                                                                                   210
    71 or over                                                                      120                                                                                   160
                                                            Table 2 for Line 3 Above
    IF the annuitants' combined ages 
    on your annuity starting date 
    were . . .                                              THEN enter on line 3 . . .
    110 or under                                                                    410
    111–120                                                                         360
    121–130                                                                         310
    131–140                                                                         260
    141 or over                                                                     210

* A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died be-
fore August 21, 1996.

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Worksheet B. Lump-Sum Payment 
               See the instructions in Part II of this publication 
               under Alternative Annuity Option.                                                           Keep for Your Records

1. Enter your lump-sum credit (your cost in the plan at the annuity starting date) . . . . . . . . . . . . . . . . . . . . .                             1.              
2. Enter the present value of your annuity contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                2.              
3. Divide line 1 by line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3.              
4. Tax-free amount. Multiply line 1 by line 3. (Caution: Don't include this amount on line 6 of Worksheet A in 
   this publication.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.              
5. Taxable amount (net cost in the plan). Subtract line 4 from line 1. Include this amount in the total on 
   Form 1040, 1040-SR, or 1040-NR, line 5b. Also, enter this amount on line 2 of Worksheet A in this 
   publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.              

                                                                      Go to IRS.gov/TCE or download the free IRS2Go app 
                                                                      for information on free tax return preparation.
How To Get Tax Help                                                 • MilTax. Members of the U.S. Armed Forces and quali-
                                                                      fied veterans may use MilTax, a free tax service of-
If you have questions about a tax issue; need help prepar-            fered by the Department of Defense through Military 
ing your tax return; or want to download free publications,           OneSource. For more information, go to 
forms, or instructions, go to IRS.gov to find resources that          MilitaryOneSource MilitaryOneSource.mil/MilTax (                                        ).
can help you right away.                                               Also, the IRS offers Free Fillable Forms, which can 
                                                                      be completed online and then e-filed regardless of in-
Preparing and filing your tax return.           After receiving all   come.
your wage and earnings statements (Forms W-2, W-2G, 
1099-R,  1099-MISC,  1099-NEC,  etc.);  unemployment                Using online tools to help prepare your return.                                         Go to 
compensation statements (by mail or in a digital format) or         IRS.gov/Tools for the following.
other  government  payment  statements  (Form  1099-G);               The Earned Income Tax Credit Assistant IRS.gov/ (
                                                                    •
and  interest,  dividend,  and  retirement  statements  from          EITCAssistant) determines if you’re eligible for the 
banks and investment firms (Forms 1099), you have sev-                earned income credit (EIC).
eral options to choose from to prepare and file your tax re-
turn.  You  can  prepare  the  tax  return  yourself,  see  if  you • The Online EIN Application IRS.gov/EIN (                                              ) helps you 
qualify for free tax preparation, or hire a tax professional to       get an employer identification number (EIN) at no 
prepare your return.                                                  cost.
                                                                    • The Tax Withholding Estimator IRS.gov/W4App (                                         ) 
Free options for tax preparation.        Your options for pre-
                                                                      makes it easier for you to estimate the federal income 
paring  and  filing  your  return  online  or  in  your  local  com-
                                                                      tax you want your employer to withhold from your pay-
munity, if you qualify, include the following.
                                                                      check. This is tax withholding. See how your withhold-
•  Free File. This program lets you prepare and file your             ing affects your refund, take-home pay, or tax due.
   federal individual income tax return for free using soft-          The First-Time Homebuyer Credit Account Look-up 
                                                                    •
   ware or Free File Fillable Forms. However, state tax               (IRS.gov/HomeBuyer) tool provides information on 
   preparation may not be available through Free File. Go             your repayments and account balance.
   to IRS.gov/FreeFile to see if you qualify for free online 
   federal tax preparation, e-filing, and direct deposit or         • The Sales Tax Deduction Calculator IRS.gov/ (
   payment options.                                                   SalesTax) figures the amount you can claim if you 
                                                                      itemize deductions on Schedule A (Form 1040).
•  VITA. The Volunteer Income Tax Assistance (VITA) 
   program offers free tax help to people with                         Getting  answers  to  your  tax  questions.  On 
   low-to-moderate incomes, persons with disabilities,                 IRS.gov,  you  can  get  up-to-date  information  on 
   and limited-English-speaking taxpayers who need                     current events and changes in tax law.
   help preparing their own tax returns. Go to IRS.gov/             • IRS.gov/Help: A variety of tools to help you get an-
   VITA, download the free IRS2Go app, or call                        swers to some of the most common tax questions.
   800-906-9887 for information on free tax return prepa-
   ration.                                                          • IRS.gov/ITA: The Interactive Tax Assistant, a tool that 
                                                                      will ask you questions and, based on your input, pro-
•  TCE. The Tax Counseling for the Elderly (TCE) pro-                 vide answers on a number of tax topics.
   gram offers free tax help for all taxpayers, particularly 
   those who are 60 years of age and older. TCE volun-              • IRS.gov/Forms: Find forms, instructions, and publica-
   teers specialize in answering questions about pen-                 tions. You will find details on the most recent tax 
   sions and retirement-related issues unique to seniors.             changes and interactive links to help you find answers 
                                                                      to your questions.

30                                                                                                                                                          Publication 721 (2023)

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• You may also be able to access tax information in your ice is a federally funded program and is available at Tax-
e-filing software. payer Assistance Centers (TACs), most IRS offices, and
every VITA/TCE tax return site. The OPI Service is acces-
sible in more than 350 languages.
Need someone to prepare your tax return? There are
various types of tax return preparers, including enrolled Accessibility Helpline available for taxpayers with
agents, certified public accountants (CPAs), accountants, disabilities. Taxpayers who need information about ac-
and many others who don’t have professional credentials. cessibility services can call 833-690-0598. The Accessi-
If you choose to have someone prepare your tax return, bility Helpline can answer questions related to current and
choose that preparer wisely. A paid tax preparer is: future accessibility products and services available in al-
• Primarily responsible for the overall substantive accu- ternative media formats (for example, braille, large print,
racy of your return, audio, etc.). The Accessibility Helpline does not have ac-
cess to your IRS account. For help with tax law, refunds, or
• Required to sign the return, and account-related issues, go to IRS.gov/LetUsHelp.
• Required to include their preparer tax identification
number (PTIN). Note. Form 9000, Alternative Media Preference, or
Form 9000(SP) allows you to elect to receive certain types
Although the tax preparer always signs the return, of written correspondence in the following formats.
! you're ultimately responsible for providing all the • Standard Print.
CAUTION information required for the preparer to accurately
prepare your return and for the accuracy of every item re- • Large Print.
ported on the return. Anyone paid to prepare tax returns
for others should have a thorough understanding of tax • Braille.
matters. For more information on how to choose a tax pre- • Audio (MP3).
parer, go to Tips for Choosing a Tax Preparer on IRS.gov.
• Plain Text File (TXT).
Employers can register to use Business Services On- • Braille Ready File (BRF).
line. The Social Security Administration (SSA) offers on-
Disasters. Go to IRS.gov/DisasterRelief to review the
line service at SSA.gov/employer for fast, free, and secure
available disaster tax relief.
W-2 filing options to CPAs, accountants, enrolled agents,
and individuals who process Form W-2, Wage and Tax Getting tax forms and publications. Go to IRS.gov/
Statement, and Form W-2c, Corrected Wage and Tax Forms to view, download, or print all the forms, instruc-
Statement. tions, and publications you may need. Or, you can go to
IRS.gov/OrderForms to place an order.
IRS social media. Go to IRS.gov/SocialMedia to see the
various social media tools the IRS uses to share the latest Getting tax publications and instructions in eBook
information on tax changes, scam alerts, initiatives, prod- format. Download and view most tax publications and in-
ucts, and services. At the IRS, privacy and security are our structions (including the Instructions for Form 1040) on
highest priority. We use these tools to share public infor- mobile devices as eBooks at IRS.gov/eBooks.
mation with you. Don’t post your social security number IRS eBooks have been tested using Apple's iBooks for
(SSN) or other confidential information on social media iPad. Our eBooks haven’t been tested on other dedicated
sites. Always protect your identity when using any social eBook readers, and eBook functionality may not operate
networking site. as intended.
The following IRS YouTube channels provide short, in-
formative videos on various tax-related topics in English, Access your online account (individual taxpayers
Spanish, and ASL. only). Go to IRS.gov/Account to securely access infor-
mation about your federal tax account.
• Youtube.com/irsvideos.
• Youtube.com/irsvideosmultilingua. • View the amount you owe and a breakdown by tax
year.
• Youtube.com/irsvideosASL.
• See payment plan details or apply for a new payment
Watching IRS videos. The IRS Video portal plan.
(IRSVideos.gov) contains video and audio presentations • Make a payment or view 5 years of payment history
for individuals, small businesses, and tax professionals. and any pending or scheduled payments.
Online tax information in other languages. You can • Access your tax records, including key data from your
find information on IRS.gov/MyLanguage if English isn’t most recent tax return, and transcripts.
your native language. • View digital copies of select notices from the IRS.
Free Over-the-Phone Interpreter (OPI) Service. The • Approve or reject authorization requests from tax pro-
IRS is committed to serving taxpayers with limited-English fessionals.
proficiency (LEP) by offering OPI services. The OPI Serv-

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• View your address on file or manage your communica- The IRS can’t issue refunds before mid-February
tion preferences. ! for returns that claimed the EIC or the additional
CAUTION child tax credit (ACTC). This applies to the entire
Get a transcript of your return. With an online account, refund, not just the portion associated with these credits.
you can access a variety of information to help you during
the filing season. You can get a transcript, review your
Making a tax payment. Payments of U.S. tax must be
most recently filed tax return, and get your adjusted gross
remitted to the IRS in U.S. dollars. Digital assets are not
income. Create or access your online account at IRS.gov/
accepted. Go to IRS.gov/Payments for information on how
Account.
to make a payment using any of the following options.
Tax Pro Account. This tool lets your tax professional • IRS Direct Pay: Pay your individual tax bill or estimated
submit an authorization request to access your individual tax payment directly from your checking or savings ac-
taxpayer IRS online account. For more information, go to count at no cost to you.
IRS.gov/TaxProAccount.
• Debit Card, Credit Card, or Digital Wallet: Choose an
Using direct deposit. The safest and easiest way to re- approved payment processor to pay online or by
ceive a tax refund is to e-file and choose direct deposit, phone.
which securely and electronically transfers your refund di- • Electronic Funds Withdrawal: Schedule a payment
rectly into your financial account. Direct deposit also when filing your federal taxes using tax return prepara-
avoids the possibility that your check could be lost, stolen, tion software or through a tax professional.
destroyed, or returned undeliverable to the IRS. Eight in
10 taxpayers use direct deposit to receive their refunds. If • Electronic Federal Tax Payment System: Best option
you don’t have a bank account, go to IRS.gov/ for businesses. Enrollment is required.
DirectDeposit for more information on where to find a bank • Check or Money Order: Mail your payment to the ad-
or credit union that can open an account online. dress listed on the notice or instructions.
Reporting and resolving your tax-related identity • Cash: You may be able to pay your taxes with cash at
theft issues. a participating retail store.
• Tax-related identity theft happens when someone • Same-Day Wire: You may be able to do same-day
steals your personal information to commit tax fraud. wire from your financial institution. Contact your finan-
Your taxes can be affected if your SSN is used to file a cial institution for availability, cost, and time frames.
fraudulent return or to claim a refund or credit.
Note. The IRS uses the latest encryption technology to
• The IRS doesn’t initiate contact with taxpayers by ensure that the electronic payments you make online, by
email, text messages (including shortened links), tele- phone, or from a mobile device using the IRS2Go app are
phone calls, or social media channels to request or safe and secure. Paying electronically is quick, easy, and
verify personal or financial information. This includes faster than mailing in a check or money order.
requests for personal identification numbers (PINs),
passwords, or similar information for credit cards, What if I can’t pay now? Go to IRS.gov/Payments for
banks, or other financial accounts. more information about your options.
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft • Apply for an online payment agreement IRS.gov/ (
Central webpage, for information on identity theft and OPA) to meet your tax obligation in monthly install-
data security protection for taxpayers, tax professio- ments if you can’t pay your taxes in full today. Once
nals, and businesses. If your SSN has been lost or you complete the online process, you will receive im-
stolen or you suspect you’re a victim of tax-related mediate notification of whether your agreement has
identity theft, you can learn what steps you should been approved.
take. • Use the Offer in Compromise Pre-Qualifier to see if
• Get an Identity Protection PIN (IP PIN). IP PINs are you can settle your tax debt for less than the full
six-digit numbers assigned to taxpayers to help pre- amount you owe. For more information on the Offer in
vent the misuse of their SSNs on fraudulent federal in- Compromise program, go to IRS.gov/OIC.
come tax returns. When you have an IP PIN, it pre-
vents someone else from filing a tax return with your Filing an amended return. Go to IRS.gov/Form1040X
SSN. To learn more, go to IRS.gov/IPPIN. for information and updates.

Ways to check on the status of your refund. Checking the status of your amended return. Go to
IRS.gov/WMAR to track the status of Form 1040-X amen-
• Go to IRS.gov/Refunds. ded returns.
• Download the official IRS2Go app to your mobile de- It can take up to 3 weeks from the date you filed
vice to check your refund status. ! your amended return for it to show up in our sys-
• Call the automated refund hotline at 800-829-1954. CAUTION tem, and processing it can take up to 16 weeks.

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Understanding an IRS notice or letter you’ve re- What Can TAS Do for You?
ceived. Go to IRS.gov/Notices to find additional informa-
tion about responding to an IRS notice or letter. TAS can help you resolve problems that you can’t resolve
with the IRS. And their service is free. If you qualify for
Responding to an IRS notice or letter. You can now their assistance, you will be assigned to one advocate
upload responses to all notices and letters using the who will work with you throughout the process and will do
Document Upload Tool. For notices that require additional everything possible to resolve your issue. TAS can help
action, taxpayers will be redirected appropriately on you if:
IRS.gov to take further action. To learn more about the
tool, go to IRS.gov/Upload. • Your problem is causing financial difficulty for you,
your family, or your business;
Note. You can use Schedule LEP (Form 1040), Re- • You face (or your business is facing) an immediate
quest for Change in Language Preference, to state a pref- threat of adverse action; or
erence to receive notices, letters, or other written commu-
nications from the IRS in an alternative language. You may • You’ve tried repeatedly to contact the IRS but no one
not immediately receive written communications in the re- has responded, or the IRS hasn’t responded by the
quested language. The IRS’s commitment to LEP taxpay- date promised.
ers is part of a multi-year timeline that began providing
translations in 2023. You will continue to receive communi- How Can You Reach TAS?
cations, including notices and letters, in English until they
are translated to your preferred language. TAS has offices in every state, the District of Columbia,
and Puerto Rico. To find your advocate’s number:
Contacting your local TAC. Keep in mind, many ques- • Go to TaxpayerAdvocate.IRS.gov/Contact-Us;
tions can be answered on IRS.gov without visiting a TAC.
Go to IRS.gov/LetUsHelp for the topics people ask about • Download Pub. 1546, The Taxpayer Advocate Service
most. If you still need help, TACs provide tax help when a Is Your Voice at the IRS, available at IRS.gov/pub/irs-
tax issue can’t be handled online or by phone. All TACs pdf/p1546.pdf;
now provide service by appointment, so you’ll know in ad- • Call the IRS toll free at 800-TAX-FORM
vance that you can get the service you need without long (800-829-3676) to order a copy of Pub. 1546;
wait times. Before you visit, go to IRS.gov/TACLocator to
find the nearest TAC and to check hours, available serv- • Check your local directory; or
ices, and appointment options. Or, on the IRS2Go app, • Call TAS toll free at 877-777-4778.
under the Stay Connected tab, choose the Contact Us op-
tion and click on “Local Offices.” How Else Does TAS Help Taxpayers?

The Taxpayer Advocate Service (TAS) TAS works to resolve large-scale problems that affect
many taxpayers. If you know of one of these broad issues,
Is Here To Help You report it to TAS at IRS.gov/SAMS. Be sure to not include
What Is TAS? any personal taxpayer information.

TAS is an independent organization within the IRS that Low Income Taxpayer Clinics (LITCs)
helps taxpayers and protects taxpayer rights. TAS strives
to ensure that every taxpayer is treated fairly and that you LITCs are independent from the IRS and TAS. LITCs rep-
know and understand your rights under the Taxpayer Bill resent individuals whose income is below a certain level
of Rights. and who need to resolve tax problems with the IRS. LITCs
can represent taxpayers in audits, appeals, and tax collec-
How Can You Learn About Your Taxpayer tion disputes before the IRS and in court. In addition,
LITCs can provide information about taxpayer rights and
Rights?
responsibilities in different languages for individuals who
speak English as a second language. Services are offered
The Taxpayer Bill of Rights describes 10 basic rights that
for free or a small fee. For more information or to find an
all taxpayers have when dealing with the IRS. Go to
LITC near you, go to the LITC page at
TaxpayerAdvocate.IRS.gov to help you understand what
TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134,
these rights mean to you and how they apply. These are
Low Income Taxpayer Clinic List, at IRS.gov/pub/irs-pdf/
your rights. Know them. Use them.
p4134.pdf.

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                    To help us develop a more useful index, please let us know if you have ideas for index entries.
Index               See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                       CSF 1099-R   5                   Refund of contributions          3
A                                      W-4P   4                         Retirees, rules for 5
Alternative annuity option:            W-4R   4                         Retirement during the past year                        10
  Lump-sum payment    7                                                 Rollovers:
Annual leave 10                      G                                   Nonspouse beneficiary           17
Annuity:                             General Rule  7 26,                 Rollover rules 14
  Starting date 5                    Gift tax 10                         SIMPLE retirement accounts                      15
  Statement 5                                                            To Roth IRAs 17
  With survivor benefit 21           I                                  Roth Thrift Savings Plan          13
  Without survivor benefit 6         Income in respect of a decedent 27
Assistance (See Tax help)            Income tax withholding  3 19,      S
                                                                        SIMPLE retirement accounts                       15
B                                    L                                  Simplified Method   6 26, 
Benefits, how to report 18           Lump-sum CSRS or FERS              Substantial gainful activity                     20
                                       payment   24 26,                 Survivor annuity 6 21 26,      , 
C                                    Lump-sum payment:                  Survivors of federal employees                         20
Child's temporary annuity    21        Alternative annuity option 7     Survivors of federal retirees                    25
Community property laws      12        Installments 9
Contributions, refund of   3           Withholding  4                   T
Cost (contributions to retirement                                       Tax help 30
  plan) 5                            M                                  Thrift Savings Plan 2 13, 
Credit for the elderly or the        Mandatory retirement age     20     Roth option 13
  disabled 20                        Marital deduction  25
                                     Minimum retirement age    19       U
D                                                                       Uniformed services Thrift Savings 
Death benefit  21                    N                                   Plan 2
Deduction for estate tax   27        Nonresident alien retiree 12       Unused annual leave  20
Disability retirement 19
Disabled child  23                   P                                  V
Distributions:                       Permanently and totally            Voluntary contributions          10 24 27,         , 
  Qualified domestic relations order   disabled  20
   (QDRO)    16                      Physician's statement   20         W
  Withholding from TSP payments 4    Public safety officers:            Withholding certificate          4
                                       Dependents   20                  Withholding of income tax                        3 19, 
E                                      Insurance premiums  18           Worksheets:
Estate tax 25 27,                      Survivors 23                      Lump-sum payment at end of 
Estimated tax  3 4,                  Publications (See Tax help)         survivor annuity    24
                                                                         Lump-sum payment to the estate or 
F                                    Q                                   other beneficiary   26
Federal Employees' Compensation      Qualified domestic relations order  Lump-sum payment under 
  Act (FECA)   19                      (QDRO)   16                       alternative annuity option                      30
Filing requirements 5                                                    Nonresident alien retiree        12
Form:                                R                                   Simplified Method   29
  1099-R 4                           Reemployment after retirement   12
  CSA 1099-R    4

34                                                                                 Publication 721 (2023)

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