A Valuable Tax Benefit for Retired Public Safety Officers

A Valuable Tax Benefit for Retired Public Safety Officers

 

If you’re a retired police officer, firefighter, or served in another qualified public safety role, and you receive a government pension, there’s a tax break you should know about.

Retired public safety officers can exclude up to $3,000 per year of pension distribution from their taxable income if the money is used to pay for health insurance or long-term care insurance. This exclusion applies to money paid from your government pension to cover the cost of health insurance or long-term care insurance.

There are two ways this works:

• The payment can be made directly from your pension plan to the insurance provider, or
• You can receive the distribution yourself and then pay the insurance provider.

Either way, this exclusion helps reduce your taxable income—which can lower your overall tax bill.

Eligible retirement plans include the following governmental plans maintained by the employer that you retired from as a public safety officer:

• Section 403(a) plan
• Section 403(b) annuity
• Section 457(b) plan

Not all retirees are aware of this benefit, and not all pension plans are set up to allow it. If you are unsure whether your plan qualifies for this this exclusion, it’s a good idea to contact your pension administrator or insurance provider to find out more.

 

And of course, we’re here to help if you have any questions. Feel free to reach out!

 

Honorine M. Campisi, CPA