Publication 721 - Tax Guide To U.s. Civil Service Retirement Benefits

Note. Rollovers to Roth IRAs are not tax free and are

benefits in a form not offered by the plan, nor can it require

the plan to pay increased benefits.

included in income. See

Rollovers to Roth IRAs

later.

A distribution that is paid to a child, dependent, or, if

Reasonable period of time. The TSP or OPM must

applicable, an attorney for fees, under a QDRO or a quali-

provide you with a written explanation no earlier than 90

fying order is taxed to the plan participant.

days and no later than 30 days before the distribution is

made. However, you can choose to have the TSP or OPM

Rollovers by surviving spouse. You may be able to roll

make a distribution less than 30 days after the explanation

over tax free all or part of the CSRS, FERS, or TSP

is provided, as long as the following two requirements are

distribution you receive as the surviving spouse of a de-

met.

ceased employee or retiree. The rollover rules apply to you

as if you were the employee or retiree. You generally can

•

You have the opportunity to consider whether or not

roll over the distribution into a qualified retirement plan or

you want to make a direct rollover for at least 30

an IRA. An amount rolled over to a Roth IRA is not tax free.

days after the explanation is provided.

See

Rollovers to Roth IRAs

later.

•

The information you receive clearly states that you

A distribution paid to a beneficiary other than the em-

ployee’s surviving spouse is generally not an eligible rollo-

have the right to have 30 days to make a decision.

ver distribution. However, see Rollovers by nonspouse

Contact the TSP or OPM if you have any questions about

beneficiary, next.

this information.

Rollovers by nonspouse beneficiary. You may be able

Rollovers to Roth IRAs.

to roll over tax free all or a portion of a distribution you

receive from the CSRS, FERS, or TSP of a deceased

You can roll over distributions directly from the CSRS,

employee or retiree if you are a designated beneficiary

FERS, and TSP to a Roth IRA.

(other than a surviving spouse) of the employee or retiree.

You must include in your gross income distributions

The distribution must be a direct trustee-to-trustee transfer

from the CSRS, FERS, and TSP that you would have had

to your IRA that was set up to receive the distribution. The

to include in income if you had not rolled them over into a

transfer will be treated as an eligible rollover distribution

Roth IRA. You do not include in gross income any part of a

and the receiving plan will be treated as an inherited IRA.

An amount rolled over to a Roth IRA is not tax free. See

distribution that is a return of contributions that were tax-

Rollovers to Roth IRAs

later. For information on inherited

able to you when paid. In addition, the 10% tax on early

IRAs, see Publication 590.

distributions does not apply.

Any amount rolled over to a Roth IRA is subject to the

How to report. On your Form 1040, report the total distri-

same rules for converting a traditional IRA into a Roth IRA.

butions from the CSRS, FERS, or TSP on line 16a. Report

For more information, see Converting From Any Tradi-

the taxable amount of the distributions (total distribution

tional IRA Into a Roth IRA in chapter 1 of Publication 590.

less the amount rolled over) on line 16b. If you file Form

How to report. A rollover to a Roth IRA is not a tax-free

1040A, report the total distributions on line 12a and the

taxable amount on line 12b. If you file Form 1040NR,

distribution other than any after-tax contributions you

report the total distributions on line 17a and the taxable

made. Report a rollover from a qualified retirement plan to

amount on line 17b. Also, write “Rollover” next to line 16b,

a Roth IRA on Form 1040, lines 16a and 16b; Form 1040A,

12b, or 17b, whichever is applicable.

lines 12a and 12b; or Form 1040NR, lines 17a and 17b.

If the rollover was made to a Roth IRA, see

Rollovers to

Enter the total amount of the distribution before income

Roth IRAs

later for reporting the rollover on your return.

tax or deductions were withheld on Form 1040, line 16a;

Form 1040A, line 12a; or Form 1040NR, line 17a. This

Written explanation to recipients. The TSP or OPM

amount is shown in box 1 of Form 1099-R. From this

must provide a written explanation to you within a reasona-

amount, subtract any contributions (usually shown in box 5

ble period of time before making an eligible rollover distri-

of Form 1099-R) that were taxable to you when made.

bution to you. It must tell you about all of the following.

From that result, subtract the amount of any qualified

•

Your right to have the distribution paid tax free di-

rollover from a designated Roth account. Enter the remain-

rectly to another qualified retirement plan or to a

ing amount, even if zero, on Form 1040, line 16b; Form

traditional IRA.

1040A, line 12b; or Form 1040NR, line 17b.

•

The requirement to withhold tax from the distribution

Special rules for 2010 rollovers from qualified retire-

if it is not directly rolled over.

ment plans to Roth IRAs. In 2010, you were able rollover

•

The nontaxability of any part of the distribution that

amounts from a qualified retirement plan to a Roth IRA.

you roll over within 60 days after you receive the

Special rules allowed you to include any amounts required

distribution.

to be included in income in equal amounts in 2011 and

•

2012. You could have also chosen to include the total

Other qualified retirement plan rules that apply, in-

amount in income in 2010. See your tax return instructions

cluding those for lump-sum distributions, alternate

payees, and cash or deferred arrangements.

to figure the taxable amount for 2011.

•

How the distribution rules of the plan to which you

If you must include any amount in your gross

income, you may have to increase your withhold-

roll over the distribution may differ from the rules that

apply to the plan making the distribution in their

ing or make estimated tax payments. See Publi-

CAUTION

cation 505, Tax Withholding and Estimated Tax.

restrictions and tax consequences.

Publication 721 (2011)

Page 15

Publication 721 - Tax Guide To U.s. Civil Service Retirement Benefits - 2011 Page 15

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