Publication 721 - Tax Guide To U.s. Civil Service Retirement Benefits - 2002 Page 21
ADVERTISEMENT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28Worksheet D. Lump-Sum Payment
The above TSP document is also available on the
at End of Survivor Annuity — Example
Internet at Select “Forms & Publi-
cations” and then select “Other Documents.”
1. Enter the lump-sum payment . . . . . 1.
$
38,400
2. Enter the amount of annuity
Federal Estate Tax
previously received tax free . . . . . . . 2.
1,000
3. Add lines 1 and 2 . . . . . . . . . . . . . . 3.
39,400
Form 706, United States Estate (and Generation-Skipping
4. Enter the employee’s total cost . . . . 4.
45,000
Transfer) Tax Return, must be filed for the estate of a
citizen or resident of the United States who died in 2002 if
5. Taxable amount. Subtract line 4
from line 3. Enter the result, but not
the gross estate is more than $1,000,000. Included in this
less than zero . . . . . . . . . . . . . . . . . 5.
0
$1,000,000 are any taxable gifts made by the decedent
after 1976 and the specific exemption allowed for gifts by
the decedent after September 8, 1976, and before 1977.
Voluntary contributions. If a CSRS employee dies
The gross estate generally includes the value of all
before retiring from government service, any voluntary
property beneficially owned by the decedent at the time of
contributions to the retirement fund cannot be used to
death. Examples of property included in the gross estate
provide an additional annuity to the survivors. Instead, the
are salary or annuity payments that had accrued to an
voluntary contributions plus any accrued interest will be
employee or retiree, but which were not paid before death,
paid in a lump sum to the estate or other beneficiary. The
and the balance in the decedent’s TSP account.
beneficiary generally must include any interest received in
The gross estate also usually includes the value of the
income for the year distributed or made available. How-
death and survivor benefits payable under the CSRS or the
ever, if the beneficiary is the employee’s surviving spouse,
FERS. If the federal employee died leaving no one eligible
the interest can be rolled over. See Rollover by surviving
to receive a survivor annuity, the lump sum (representing
spouse under Rollover Rules in Part II.
the employee’s contribution to the system plus any ac-
The interest, if not rolled over, generally is subject to
crued interest) payable to the estate or other beneficiary is
federal income tax withholding at a 20% rate (or 10% rate if
included in the employee’s gross estate.
the beneficiary is not the employee’s surviving spouse). It
may qualify as a lump-sum distribution eligible for capital
Marital deduction. The estate tax marital deduction is a
gain treatment or the 10-year tax option if:
deduction from the gross estate of the value of property
•
that is included in the gross estate but that passes, or has
Regular annuity benefits cannot be paid under the
passed, to the surviving spouse. Generally, there is no limit
system, and
on the amount of the marital deduction. Community prop-
•
The beneficiary also receives a lump-sum payment
erty passing to the surviving spouse qualifies for the mari-
of the regular contributions plus interest within the
tal deduction.
same tax year as the voluntary contributions.
More information. For more information, get Publication
950 and Publication 559, Survivors, Executors, and Ad-
For more information, see Lump-Sum Distributions in
ministrators.
Publication 575.
Thrift Savings Plan
Part V
The payment you receive as the beneficiary of a
Rules for Survivors
decedent’s Thrift Savings Plan (TSP) account is fully taxa-
ble. However, if you are the decedent’s surviving spouse,
of Federal Retirees
you generally can roll over the payment tax free. If you do
not choose a direct rollover of the decedent’s TSP account,
This part of the publication is for survivors of federal retir-
mandatory 20% income tax withholding will apply. For
ees. It explains how to treat amounts you receive because
more information, see Rollover Rules in Part II. If you are
of the retiree’s death. If you are the survivor of a federal
not the surviving spouse, the payment is not eligible for
employee, see Part IV.
rollover treatment. The TSP will withhold 10% of the pay-
Decedent’s retirement benefits. Retirement benefits ac-
ment for federal income tax, unless you give the TSP a
crued and payable to a CSRS or FERS retiree before
Form W – 4P to choose not to have tax withheld.
death, but paid to you as a survivor, are taxable in the
If the entire TSP account balance is paid to the benefi-
same manner and to the same extent these benefits would
ciaries in the same calendar year, it may qualify as a
have been taxable had the retiree lived to receive them.
lump-sum distribution eligible for the 10-year tax option.
See Lump-Sum Distributions in Publication 575 for details.
Also, see Important Tax Information About Thrift Savings
Plan Death Benefit Payments, which is available from the
TSP.
Page 21
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Financial