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Instructions for Reporting Pension and Annuity Income Updated

The IRS has issued an updated version of Publication 575, “Pension and Annuity Income,” for use in preparing 2015 returns. It made changes to the exception to the tax on early distributions from a governmental plan for qualified public safety employees and to the rules regarding rollovers to SIMPLE retirement accounts.

Exception to the Tax on Early Distributions

For 2015 reporting, the IRS expanded the exception to the tax on early distributions from a governmental plan for qualified public safety employees. For tax years beginning after Dec. 31, 2015, the definition of qualified public safety employees is expanded to include the following:

  • federal law enforcement officers;
  • federal customs and border protection officers;
  • federal firefighters;
  • air traffic controllers;
  • nuclear materials couriers;
  • members of the United States Capitol Police;
  • members of the Supreme Court Police; and
  • diplomatic security special agents of the State Department.
The exception to the tax also is extended to distributions from governmental defined benefit and defined contribution plans, as well as governmental defined benefit plans.

Rollovers to SIMPLE Retirement Accounts

Beginning after Dec. 18, 2015, it is possible to roll over amounts from a qualified retirement or an IRA into a SIMPLE retirement account as follows:

  • During the first two years of participation in a SIMPLE retirement account, you may roll over amounts from one SIMPLE retirement account into another SIMPLE retirement account, and
  • After the first two years of participation in a SIMPLE retirement account, you may roll over amounts from a SIMPLE retirement account, a qualified retirement plan or an IRA into a SIMPLE retirement account.
The qualified retirement plans to which this applies include:

  • a qualified employee plan;
  • a qualified employee annuity;
  • a 403(b) plan; and
  • an eligible state or local governmental 457 plan.