2012 Publication 721 - Internal Revenue Service

Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 10 Draft Ok to Print AH XSL/XML Fileid: … tions/P721/2012/A/XML/Cycle03/source (Init. & Date) _______ Page 1 of 33 12:45 - 1-Feb-2013 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Internal Revenue Service Publication 721 Cat. No. 46713C Tax Guide to U.S. Civil Service Retirement Benefits For use in preparing 2012 Returns Get forms and other Information faster and easier by: Internet IRS.gov Contents What's New .............................. 1 Reminders ............................... 1 Introduction .............................. 2 Part I General Information ................... 3 Part II Rules for Retirees .................... 5 Part III Rules for Disability Retirement and Credit for the Elderly or

the Disabled ....... 18 Part IV Rules for Survivors of Federal Employees ........................... 20 Part V Rules for Survivors of Federal Retirees ............................. 25 How To Get Tax Help ...................... 27 Worksheets ............................. 31 Index .................................. 33 What's New Phased retirement. On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (also known as MAP-21) was signed into law. Once regulations for the new phased retirement program are effective, the pro- gram will allow eligible employees to begin receiving an- nuity payments while working part-time. For more informa- tion, go to the Office of Personnel Management (OPM) website at www.opm.gov. Roth Thrift Savings Plan (TSP) balance. You may be able to contribute to a designated Roth account through the TSP known as the Roth TSP. Roth TSP contributions are after-tax contributions, subject to the same contribu- tion limits as the traditional TSP. Qualified distributions from a Roth TSP are not included in your income. See Thrift Savings Plan in Part II for more information. Reminders Future developments. For the latest information about developments related to Publication 721, such as legisla- tion enacted after it was published, go to www.IRS.gov/ pub721. Disaster related tax relief. Special rules apply to the use of retirement funds by qualified individuals who suf- fered an economic loss as a result of the severe storms in the Midwestern disaster areas during 2008. See Publica- tion 575, for information on these special rules. Rollovers. You can roll over certain amounts from the CSRS, FERS, or TSP, to a tax-sheltered annuity plan (403(b) plan) or a state or local government section 457 deferred compensation plan. See Rollover Rules in Part II. Rollovers by surviving spouse. You may be able to roll over a distribution you receive as the surviving spouse of Feb 01, 2013 Page 2 of 33 Fileid: … tions/P721/2012/A/XML/Cycle03/source 12:45 - 1-Feb-2013 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. a deceased employee or retiree into a qualified retirement plan or an IRA. See Rollover Rules in Part II. Thrift Savings Plan (TSP) beneficiary participant ac­ counts. If you are the spouse beneficiary of a decedent's TSP account, you have the option of leaving the death benefit payment in a TSP account in your own name (a beneficiary participant account). The amounts in the ben- eficiary participant account are neither taxable or...

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