Alabama Partially Taxable Pensions

Worksheet for Partially Taxable Pensions, Annuities, and IRA Distributions

Use the worksheet to report distributions from profit-sharing plans, retirement plans, employee savings plans, and individual retirement arrangements not fully taxable. Also, use this worksheet to report pension and annuity income not fully taxable. If the income or distribution is fully taxable you do NOT need to complete this worksheet. In general, you should receive a 1099-R showing the amount of your retirement plan distribution or income. If the taxable portion shown on your 1099-R is the same for Alabama purposes as for Federal purposes you do NOT need to complete this worksheet. Instead report the total and the taxable amount on Form 40, page 2, Part I, lines 4 or 5.

The taxable portion may NOT be the same for Alabama purposes as for Federal purposes because you may have a different cost basis. In this case, you must complete this worksheet to calculate the amount taxable for Alabama purposes. Amounts you received from the following retirement systems are not taxable and should not be reported.

- Alabama Teacher’s Retirement System.

-Alabama Employee’s Retirement System.

-Alabama Judicial Retirement System.

-Civil Service Retirement System.

-Retirement Systems created by the Federal Social Security Acts.

-Railroad retirement benefits received under the Federal Railroad Retirement Acts of 1935 and 1937.

-Military Retirement Pay.

-TVA Pension System Benefits.

- U.S. Foreign Service Retirement and Disability Fund Annuities.

-U.S. Government Retirement Fund Benefits.

-Retirement benefits received from any Alabama firefighting agency by any eligible firefighter or designated beneficiary.

-Retirement benefits received from any Alabama police system by any eligible peace officer or designated beneficiary.

-Any “defined benefit” retirement plan in accordance with IRC 414(j). Contact your retirement plan administrator to determine if your plan qualifies.