Pension Information
Retirees May Deduct Cost of Benefit
In 2006, Congress passed the Pension Protection Act (“PPA”), which
contains many provisions that affect members of the New York City Police Pension
Fund. Among those provisions is the ability to exclude up to $3,000 from
the amount of income distributions reported to the Internal Revenue Service (“IRS”)
for payment of premiums for accident or health insurance or long-term
care insurance.
- Distributions used to pay premiums for a spouse and dependent
children are also excludable.
- This exclusion can be made if the amount paid for the premium
would have otherwise been included in your income and is deducted
directly from your pension allowance.
- What this means for retired NYPD officers is that
the cost of the City’s optional benefit rider may be
excluded from the total amount of your pension reported annually.
- The maximum amount allowed by the PPA to be excluded is $3,000;
however the amount excluded may not exceed the actual amount paid.
- To claim this benefit, you must reduce the taxable benefit on
line 16B of the 1040 by the amount of the exclusion and write “PSO” on
the line for “public safety officer.”
- The exclusion will not be reported on 1099 forms issued by the
City, so any retiree who claims the benefit has responsibility
to report it to the IRS.
- Accordingly, pensioners who retired on ADR (accidental disability
retirement) are no eligible for this exclusion because at this
their pension is not taxed.
This information is provided as a courtesy to retired members and
is based on the PBA’s current understanding of the law, but
does not constitute tax advice and should not replace the advice
of a qualified tax professional.
Note: Retiree should save their Quarterly Statement (for those
with electronic deposit) or their monthly pension check stub, in
order to document their premium deductions for any health insurance
or long term care insurance, as required proofs for the IRS, if asked. No
other documentation will be provided by the Pension Fund. Retired
members may contact Marie Elena Brusco of the Police Pension Fund
at (212) 693-6058 with questions regarding this matter.
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