Reporting Pirvate Pensions (as aposed to Public Pensions) to Social Security
Hi, I am 62 and due to inability to find another job and health reasons, I applied for social security. I was sent a letter (fron Social Security) later notifying me of pensions that I may have. I contacted them and I had 3 total. All are considered "private pensions". They are not civil or federal pensions pensions that are subject to WEP or GPO. I have never directly for a state or federal government, I.E. I have allways had social security taxes taken out.
I had to cash one that knew of in 2018 for living expenses, so that leaves 2 more. One has the lump sum option and I am going to cash it out as well. I am submitting the paperwork for the last one as a normal monthly benefit. None are civil or federal pensions (I.E. public pensions). Do I need to report these to social security, including cashed out pensions? If I have to, how do I do it?
Do I need to report these to social security, including cashed out pensions? If I have to, how do I do it?
NO - you will only report the amount you get - lump sum or monthly - on your income taxes according to whether you directly participated in the plan. They will not affect your SS benefit since as you say, you paid Social Security at the private place of employment that offered these pensions.
The SSA has a record of where you worked and if there MIGHT be pension funds for you as reported historically by the employer. They do not know if you cashed them in or if you will be drawing on them - they just do this as a reminder for beneficiaries, in case they have forgotten that they might be due a pension benefit.
@FritzC582404 You haven't said what kind of pension plans these are. Did you pay taxes on the money before it was placed in the pensions? How much interest was earned on them over the years they have existed?
For my Fire Dept pension the first few years I worked and paid into our pension taxes were paid on it. Then the city went to what was called the cafeteria plan and money was placed in our pension before taxes were withheld from our pay. I started drawing my retirement pension when I retired and taxes were withheld on the total amount. Last year they finally gave me money back on the amount I had already paid taxes on those first few years with the Fire Dept.
Yes, I have to pay taxes now on some of my pension. That amount is shown on the forms I get from the bank that handles our pension at the end of each year. They withhold taxes from my check that I get each month.
Will this affect your SS income? You need to check with your local SS office. Have you created and account with SS? Be sure to check out the FAQs. https://www.ssa.gov/ .
Whether a defined benefit pension is taxable or non-taxable, as you say, depends on how the plan was administrated.
All of that should be shown yearly on the 1099-R - in fact, again as you stated, the pension could be a combination of both - some of the proceeds you pay taxes on because they were not taxed initially and some have already been taxed.
Some pension funds gave the employees a chance to add to the amount which their employer funded. So in this case, the employer contribution will be taxed at distribution; where the part contributed by the employees will not be taxed at distribution because the employee already paid the taxes on these funds.