When the taxpayer is an eligible “retired public safety officer”, defined by the IRS as a “law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew”, they can elect to exclude up to $3,000 of the distributions they receive from an eligible retirement plan from their taxable income. To be eligible for this exclusion, the funds must be used to pay for accident or health insurance premiums or the premiums associated with a long-term care contract for the taxpayer, their spouse, or their dependents.
Important points:
- The taxpayer retired either because of a disability or they reached their normal retirement age.
- The retirement plan must be a governmental plan that is a qualified trust or a section 403(a), 403(b), or 457(b) plan.
- The distribution must be from a retirement plan maintained by the employer from which the taxpayer retired as a public safety officer and cannot be from some other retirement plan.
- The distribution must be made directly from the plan to the provider of the accident or health plan or long-term care insurance contract.
- The election can only be made for amounts that would otherwise be included in income.
The amount excluded from income is the smaller of the amount of the premiums or $3,000.
Click the year below for details on how to enter the PSO exclusion in TaxSlayer Pro.2018 and following tax years2017 tax year2016 and prior tax years
NOTE: This is a guide on entering Public Safety Officer Distributions into the TaxSlayer Pro program. This is not intended as tax advice.
Additional Information
Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits