I purchased years of service for my retirement. Can I reduce my income because of that?

Forum|Forum|2 years ago
March 14, 2024
2 replies
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I need to talk to someone

TurboTax Online

Best answer by VolvoGirl

When my husband retired from the state he bought extra years. It was not deductible then but the plan will keep track of it and when you get the pension payments it will be prorated and part of it will be tax free on your 1099R.

CatinaT1

We'd love to help you complete your tax return, but need more information. Can you please clarify your question? I'm not sure what you mean by you purchased years of service.

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VolvoGirlAnswer

Employee

Opus 17

Employee

@petitpapabs , There is no tax deduction in the current year for buying extra credits in your retirement system. Instead, the pension payer will report a portion of your benefit as non-taxable on your 1099-R when you begin collecting pension payments. That way you aren't taxed twice on the portion of the benefits that came from the non-deductible purchase of extra credits.