Do you have to file taxes on pension income

Learn more about taxes and federal retirement

FAQs and answers about taxes and federal retirement.

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Learn more about taxes and federal retirement
Questions and answers
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Do you have to file taxes if you get a pension?
How much of my pension is taxable?
How can I avoid paying tax on my pension?
Is a pension considered income by the IRS?

Questions and answers

OPM mails out 1099-R tax forms to all annuitants by January 31. You may not receive your mailed 1099-R tax form until mid-February, depending on where you live. Generally, starting the third week of January, you can sign in to your online account to view, download, or print your 1099-R.

Go to OPM Retirement Service Online

You should contact us.

After we make an update, we will mail you the corrected or amended tax form to the mailing address we have on file. OPM doesn't forward corrections or amendments to the IRS. It's your responsibility to forward the corrected or amended 1099-R to the IRS with your amended tax return.

Your retirement contributions are shown on the 1099-R tax form we send you each January for tax filing purposes.

Use the IRS tax withholding estimator to figure out the tax-free portion of your annuity payment and your monthly federal income tax withholding.

If you want to make updates to your federal tax withholding, you should sign in to your online account or contact us.

Go to OPM Retirement Services Online

If your non-disability annuity started on or after July 2, 1986, then a portion of each annuity payment is taxable and a portion is considered a tax-free recovery of your contributions to the retirement fund.

If you retired under a disability provision, then the disability annuity you receive from CSRS or FERS is taxable as wages until you reach minimum retirement age.

You can rollover lump-sum payments representing your retirement contributions, including voluntary contributions, and applicable interest.

An eligible payment can be paid either to you or directly to an individual retirement account or other employee-sponsored plan. Your choice will affect the amount of taxes you owe.

We're required to withhold federal income tax from taxable payments over $200 at the rate of 20 percent. However, you may choose to take all or part of these payments in a direct rollover to an individual retirement account or an employer-sponsored retirement plan that accepts rollovers. The taxable portion can be rolled over into the Thrift Saving Plan. If you make this election, we won't withhold the federal income tax from the taxable payments.

You can open an individual retirement account to receive a direct rollover. You must contact the individual retirement account sponsor to find out how to have your payment made to your account. If you are unsure of how to invest your money, you may want to temporarily establish an account to receive the payment. However, you may want to consider whether or not you may move any or all of the monies to another account at a later date without penalties or limitations.

If you choose to have the payment made to you and it is over $200, it is subject to the 20 percent federal income tax withholding. The payment is taxed in the year in which it is received unless within 60 days after receiving it you roll it over to an individual retirement account or retirement plan that accepts rollovers.

You can roll over up to 100 percent of the eligible distribution, including the 20 percent withholding. To do so, you must replace the 20 percent withholding within the 60 day period. You will be taxed on any amount that you do not roll over. For example, if you roll over only the 80 percent of the distribution, you will be taxed on the remaining 20 percent.

You can find more information about the taxation of payments from qualified retirement plans from the following IRS publications:

IRS Publication 575, Pension and Annuity Income
IRS Publication 590, Individual Retirement Arrangements
IRS Publication 721, Tax Guide to U.S. Civil Service Retirement System Payments
Form 4972, Tax on Lump Sum Distributions

We won't withhold any amount for federal income tax if your total taxable lump sum is less than $200. We will request a rollover election when you are eligible for a payment of $200 or more.

Your retirement contributions are not taxable, but interest included in the payment is taxable. You should contact the IRS for more information.

If Box 2.a is marked Unknown, this means that OPM didn't calculate the tax-free portion of your annuity. The most common reasons for not calculating the tax-free portion of your annuity is because of one or more of the following:

Your case is a disability retirement
You retired prior to November 19, 1996
You have voluntary contributions, and an apportionment was paid to your former spouse(s)
Your case hasn't been finalized and you are in interim pay status
You have survivor benefits payable
Your case is an Office of Workers Compensation case

OPM can refund federal and/or state income tax withholding only for the current year. Contact us to request a refund.

If you want a partial reimbursement, let us know the exact amount (no percentage) and provide the exact period (for example, 5/10/2011 to 12/31/2011). Normally, the refund is issued as a separate payment.

We cannot refund tax withholding for previous tax years. To request a refund of your withholdings for previous tax years, please contact the IRS at 1-800-829-1040 for a federal tax withholding refund and your state revenue office for a state tax withholding refund.

It depends on when you worked and whether you are covered by the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS).

Figure out which of the following conditions applies to you, and then contact your agency's HR office for guidance:

Deposit service ending before October 1, 1982 and covered by the CSRS
Deposit service ending on or after October 1, 1982 and covered by the CSRS
Deposit service ending before January 1, 1989 and covered by FERS
Deposit service ending on or after January 1, 1989 and covered by FERS

The IRS is responsible for the changes to the federal income tax withholding tables. OPM has no control over the federal income tax withholding tables. OPM uses the tables provided by the IRS, which are set in law by the U.S. Congress.

Visit the IRS website at www.irs.gov or call the IRS at 1-800-829-1040.

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Do you have to file taxes if you get a pension?

If you receive retirement benefits in the form of pension or annuity payments from a qualified employer retirement plan, all or some portion of the amounts you receive may be taxable unless the payment is a qualified distribution from a designated Roth account.

How much of my pension is taxable?

Unless you choose no withholding, a lump-sum benefit that is not an eligible rollover distribution, the taxation is 10% of the distribution.

How can I avoid paying tax on my pension?

Investors can avoid taxes on a lump sum pension payout by rolling over the proceeds into an individual retirement account (IRA) or other eligible retirement accounts.

Is a pension considered income by the IRS?

Generally, pension and annuity payments are subject to Federal income tax withholding. The withholding rules apply to the taxable part of payments or distributions from an employer pension, annuity, profit-sharing, stock bonus, or other deferred compensation plan.