The Simplified General Rule Worksheet

If Form 1099-R does not show the taxable amount in Box 2a, you may need to use the General Rule explained in Publication 575 and Publication 939 to figure the taxable portion to enter on the tax return. If the annuity starting date was after July 1, 1986, the taxpayer may be required to figure the taxable part of their distribution using the Simplified Method.

NOTE: If Form 1099-R does show a taxable amount, the taxpayer may be able to report a lower taxable amount by using the Simplified Method.

The annuity starting date is the later of

• the first day of the first period for which the taxpayer received a payment.
• the date that the plan’s obligations became fixed.

The taxpayer must use the Simplified Method if

• their annuity starting date was after July 1, 1986, and this method was used last year to figure the taxable portion;
• their annuity starting date was after November 18, 1996, and BOTH of the following apply:
  1. They received pension or annuity payments from any of the following plans:
     • A qualified employee plan, or
     • A qualified employee annuity, or
     • A tax-sheltered annuity plan (403(b) plan)
  2. On their annuity starting date, at least one of the following is true:
     • They were under age 75, or
     • They were entitled to less than 5 years of guaranteed payments

The taxpayer cannot use the Simplified Method if

• the pension or annuity is a nonqualified plan, or
• they do not meet the conditions described above.

To access the Simplified General Rule Worksheet, from the Main Menu of the Tax Return (Form 1040) select:

• Income
• IRA/Pension Distributions
• Select New  and enter the Payer Information along with the Gross Distribution in Box 1.
• Check the box labeled SGR located to the right of Line 2a. Taxable Amount.
• You will be asked if you would like to use the Simplified General Rule Worksheet. Select YES
• Enter the information relating to the annuity into the Simplified General Rule Worksheet. The calculated taxable amount will carry back to box 2a of the 1099-R entry screen.

NOTE: This is a guide on entering the Simplified General Rule Worksheet into the Keystone Tax Solutions Pro program. This is not intended as tax advice.