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

2023 Returns

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Contents

Reminders ............................... 2

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 ....... 19

Part IV Rules for Survivors of Federal 

Employees ........................... 20

Part V Rules for Survivors of Federal Retirees ... 25

Worksheets A and B ....................... 29

How To Get Tax Help ....................... 30

Index .................................. 34

Future Developments

For the latest information about developments related to 

Pub. 721, such as legislation enacted after it was 

published, go to IRS.gov/Pub721.

What’s New

Qualified disaster distributions. The 10% additional 

tax on early distributions doesn't apply to qualified distributions made in connection with federally declared disasters. See Forms 8915-C, 8915-D, and 8915-F, as applicable, for more details.

Distributions to terminally ill individuals. The 10% additional tax on early distributions doesn't apply to distributions made to terminally ill individuals.

Increase in age for mandatory distributions. Individuals that reach age 72 on January 1, 2023, or later may delay distributions until April 1 of the year following the year 

in which they turn age 73.

Expanded exception to the tax on early distributions 

from a governmental plan (including both governmental defined benefit and governmental defined 

contribution plans) for qualified public safety employees. For distributions made after December 29, 

2022, the exception to the tax on early distributions is expanded as follows:

• The definition of qualified public safety employee is 

expanded to include corrections officers and forensic 

security employees who are employees of state and 

local governments; and

• Qualified public safety employees may receive distributions without the application of the additional tax 

once they complete 25 years of service under the plan 

or attain age 50 (whichever is earlier).

Dec 27, 2023
See Qualified public safety employees under Tax on 

Early Distributions in Pub. 575, Pension and Annuity Income, for more information.

Reminders

Extended rollover period for qualified plan loan offsets in 2018 or later. For distributions made in tax years 

beginning after December 31, 2017, you have until the 

due date (including extensions) for your tax return for the 

tax year in which the offset occurs to roll over a qualified 

plan loan offset amount. For more information, see Plan 

loan offset under Time for making rollover in Pub. 575.

Maximum age for traditional IRA contributions. The 

age restriction for contributions to a traditional IRA has 

been eliminated.

Distributions in the case of a birth or adoption of a 

child. The 10% additional tax on early distributions 

doesn’t apply to qualified birth or adoption distributions.

Phased retirement. The phased retirement program was 

signed into law by the Moving Ahead for Progress in the 

21st Century Act. This program allows eligible employees 

to begin receiving annuity payments while working part 

time. For more information about phased retirement, go to 

OPM.gov and click on the Retirement tab and then 

Phased Retirement. For information on how the tax-free 

portion (recovery of investment in the contract) of your 

phased retirement benefits is figured, see Notice 2016-39, 

available at IRS.gov/irb/2016-26_IRB#NOT-2016-39.

For additional guidance, see the Benefits Administration Letter 19-102, dated May 20, 2019, available at 

OPM.gov/retirement-services/publications-forms/benefitsadministration-letters/2019/19-102.pdf.

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 contribution limits as the traditional TSP. Qualified distributions 

from a Roth TSP aren't included in your income. See Thrift 

Savings Plan in Part II for more information.

Rollovers. You can roll over certain amounts from the 

CSRS, FERS, or TSP to a qualified retirement plan or an 

IRA. 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 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 accounts. 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 beneficiary participant account are neither taxable nor reportable until you choose to make a withdrawal, or otherwise 

receive a distribution from the account.

Benefits for public safety officer's survivors. A survivor annuity received by the spouse, former spouse, or 

child of a public safety officer killed in the line of duty will 

generally be excluded from the recipient's income. For 

more information, see Dependents of public safety officers 

in Part IV.

Uniformed services Thrift Savings Plan (TSP) accounts. If you have a uniformed services TSP account, it 

may include contributions from combat pay. This pay is tax 

exempt and contributions attributable to that pay are tax 

exempt when they are distributed from the uniformed services TSP account. However, any earnings on those contributions are subject to tax when they are distributed. See 

Roth TSP balance, discussed later, to get more information about Roth contributions. The statement you receive 

from the TSP will separately state the total amount of your 

distribution and the amount of your taxable distribution for 

the year. If you have both a civilian and a uniformed services TSP account, you should apply the rules discussed in 

this publication separately to each account. You can get 

more information from the TSP website, TSP.gov, or the 

TSP Service Office.

Photographs of missing children. The IRS is a proud 

partner with the National Center for Missing & Exploited 

Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring 

these children home by looking at the photographs and 

calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

This publication explains how the federal income tax rules 

apply to civil service retirement benefits received by retired federal employees (including those disabled) or their 

survivors. These benefits are paid primarily under the Civil 

Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS).

Tax rules for annuity benefits. Part of the annuity benefits you receive is a tax-free recovery of your contributions 

to the CSRS or FERS. The rest of your annuity benefits 

are taxable. If your annuity starting date is after November 

18, 1996, you must use the Simplified Method to figure the 

taxable and tax-free parts. If your annuity starting date is 

before November 19, 1996, you generally could have 

chosen to use the Simplified Method or the General Rule. 

See Part II, Rules for Retirees.

Thrift Savings Plan (TSP). The TSP provides federal 

employees with the same savings and tax benefits that 

many private employers offer their employees. This plan is 

similar to 401(k) plans offered by the private sector. You 

can defer tax on part of your pay by having it contributed 

to your traditional balance in the plan. The contributions 

and earnings on them aren't taxed until they are distributed to you. Also, the TSP offers a Roth TSP option. Contributions to this type of balance are after tax, and qualified distributions from the account are tax free. See Thrift 

Savings Plan in Part II.

2 Publication 721 (2023)
Comments and suggestions. We welcome your comments about this publication and suggestions for future 

editions.

You can send us comments through IRS.gov/

FormComments. Or, you can write to the Internal Revenue 

Service, Tax Forms and Publications, 1111 Constitution 

Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will 

consider your comments and suggestions as we revise 

our tax forms, instructions, and publications. Don’t send 

tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions. If you have 

a tax question not answered by this publication or the How 

To Get Tax Help section at the end of this publication, go 

to the IRS Interactive Tax Assistant page at IRS.gov/

Help/ITA where you can find topics by using the search 

feature or viewing the categories listed.

Getting tax forms, instructions, and publications. 

Go to IRS.gov/Forms to download current and prior-year 

forms, instructions, and publications.

Ordering tax forms, instructions, and publications. 

Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order 

prior-year forms and instructions. The IRS will process 

your order for forms and publications as soon as possible. 

Don’t resubmit requests you’ve already sent us. You can 

get forms and publications faster online.

Useful Items

You may want to see:

Publication

Credit for the Elderly or the Disabled

Pension and Annuity Income

Contributions to Individual Retirement 

Arrangements (IRAs)

Distributions from Individual Retirement 

Arrangements (IRAs)

939 General Rule for Pensions and Annuities

Form (and Instructions)

CSA 1099-R Statement of Annuity Paid

CSF 1099-R Statement of Survivor Annuity Paid

W-4Pithholding Certificate for Periodic Pension or 

Annuity Payments

W-4Rithholding Certificate for Nonperiodic 

Payments and Eligible Rollover Distributions

1099-R Distributions From Pensions, Annuities, 

Retirement or Profit-Sharing Plans, IRAs, 

Insurance Contracts, etc.

5329 Additional Taxes on Qualified Plans (Including 

IRAs) and Other Tax-Favored Accounts

 524

 575

 590-A

 590-B

 939

 CSA 1099-R

 CSF 1099-R

 W-4P

 W-4R

 1099-R

 5329

Part I

General Information

This part of the publication contains information that can 

apply to most recipients of civil service retirement benefits.

Refund of Contributions

If you leave federal government service or transfer to a job 

not under the CSRS or FERS and you aren't eligible for an 

immediate annuity, you can choose to receive a refund of 

the money in your CSRS or FERS retirement account. The 

refund will include both regular and voluntary contributions 

you made to the fund, plus any interest payable.

If the refund includes only your contributions, none of 

the refund is taxable. If it includes any interest, the interest 

is taxable unless you roll it over directly into another qualified plan or a traditional individual retirement arrangement 

(IRA). If you don't have the Office of Personnel Management (OPM) transfer the interest to an IRA or other plan in 

a direct rollover, tax will be withheld at a 20% rate. See 

Rollover Rules in Part II for information on how to make a 

rollover.

Interest isn't paid on contributions to the CSRS for 

service after 1956 unless your service was for 

more than 1 year but not more than 5 years. 

Therefore, many employees who withdraw their contributions under the CSRS don't get interest and don't owe any 

tax on their refund.

If you don't roll over interest included in your refund, it 

may qualify as a lump-sum distribution eligible for capital 

gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. If you separate 

from service before the calendar year in which you reach 

age 55 (or before the earlier of age 50 or completing 25 

years of service under the plan if you are a qualified public 

safety employee), it may be subject to an additional 10% 

tax on early distributions. For more information, see 

Lump-Sum Distributions and Tax on Early Distributions in 

Pub. 575.

Tax Withholding and Estimated Tax

The CSRS or FERS annuity you receive is subject to federal income tax withholding, unless you choose not to 

have tax withheld. OPM will tell you how to make the 

choice. The choice for no withholding remains in effect until you change it. These withholding rules also apply to a 

disability annuity, whether received before or after minimum retirement age.

If you choose not to have tax withheld, or if you don't 

have enough tax withheld, you may have to make estimated tax payments.

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Publication 721 (2023) 3
You may owe a penalty if the total of your withheld 

tax and estimated tax doesn’t cover most of the 

tax shown on your return. Generally, you will owe 

the penalty for 2024 if the additional tax you must pay with 

your return is $1,000 or more and more than 10% of the 

tax to be shown on your 2024 return. For more information, including exceptions to the penalty, see Pub. 505, Tax 

Withholding and Estimated Tax.

Form CSA 1099-R. Form CSA 1099-R is mailed to you 

by OPM each year. It will show any tax you had withheld. 

Attach a copy of Form CSA 1099-R to your tax return if 

any federal income tax was withheld.

You can also view and download your Form CSA 

1099-R by visiting the OPM website at 

servicesonline.opm.gov. To log in, you will need 

your retirement CSA claim number, your social security 

number, and your password.

Choosing no withholding on payments outside the 

United States. The choice for no withholding generally 

can't be made for annuity payments to be delivered outside the United States and its territories.

To choose no withholding if you are a U.S. citizen or 

resident alien, you must provide OPM with your home address in the United States or its territories. Otherwise, 

OPM has to withhold tax. For example, OPM must withhold if you provide a U.S. address for a nominee, trustee, 

or agent (such as a bank) to whom the benefits are to be 

delivered, but you don't provide your own U.S. home address.

If you don't provide a home address in the United 

States or its territories, you can choose not to have tax 

withheld only if you certify to OPM that you aren't a U.S. 

citizen, a U.S. resident alien, or someone who left the United States to avoid tax. But if you so certify, you may be 

subject to the 30% flat (or lower treaty) rate withholding 

that applies to nonresident aliens. For details, see Pub. 

519, U.S. Tax Guide for Aliens.

Withholding certificate. If you give OPM a Form W-4P 

for withholding on periodic pension or annuity payments, 

or Form W-4R for withholding on nonperiodic payments, 

you can choose not to have tax withheld or you can 

choose to have tax withheld. You can’t choose to have no 

tax withheld from eligible rollover distributions. The 

amount of federal income tax withheld depends on which 

form you need to complete. See the instructions for each 

form for more information. If you don't complete Form 

W-4P, then for a payee who received a first periodic payment in 2023, OPM must withhold as if you were a single 

filer who made no entries in Step 2, Step 3, and Step 4 of 

Form W-4P. For the default 2023 withholding for a payee 

who first received a periodic payment before 2023, see 

Payee fails to furnish Form W-4P or provides an incorrect 

SSN on Form W-4P, in Pub. 15-T. If you don't complete 

Form W-4R, then for a nonperiodic payment, OPM must 

withhold federal income tax at 10%, for an eligible rollover 

distribution, the default withholding rate is 20%.

CAUTION

!

To change the amount of withholding or stop withholding go to the OPM website at 

servicesonline.opm.gov. You will need your retirement CSA or CSF claim number and password. If you do 

not have a password, call or write OPM’s Retirement Information Office.

You can also change the amount of tax withholding or stop withholding, by calling OPM's Retirement Information Office at 1-888-767-6738. No 

special form is needed. You will need your retirement CSA 

or CSF claim number and your social security number 

when you call. If you have TTY/TDD equipment, call 711.

Withholding from certain lump-sum payments. If you 

leave the federal government before becoming eligible to 

retire and you apply for a refund of your CSRS or FERS 

contributions, or you die without leaving a survivor eligible 

for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any 

interest payable. Tax will be withheld at a 20% rate on the 

interest distributed. However, tax will not be withheld if you 

have OPM transfer (roll over) the interest directly to your 

traditional IRA or other qualified plan. If you have OPM 

transfer (roll over) the interest directly to a Roth IRA, the 

entire amount will be taxed in the current year. Because 

no income tax will be withheld at the time of the transfer, 

you may want to increase your withholding or pay estimated taxes. See Rollover Rules in Part II. If you receive only 

your contributions, no tax will be withheld.

Withholding from Thrift Savings Plan (TSP) payments. Generally, a distribution that you receive from the 

TSP is subject to federal income tax withholding. The 

amount withheld is:

• 20% if the distribution is an eligible rollover distribution;

• 10% if it is a nonperiodic distribution other than an eligible rollover distribution; or

• Determined using the instructions and tables provided 

in Pub. 15-T, based on information you provide on 

Form W-4P, if it is a periodic distribution.

However, you can usually choose not to have tax withheld 

from TSP payments other than eligible rollover distributions. By January 31 after the end of the year in which you 

receive a distribution, the TSP will issue Form 1099-R 

showing the total distributions you received in the prior 

year and the amount of tax withheld.

For a detailed discussion of withholding on distributions 

from the TSP, see the TSP publication Tax Rules about 

TSP Payments and Distributions. Both these publications 

are available on the TSP website at TSP.gov/forms.

Estimated tax. Generally, you must make estimated tax 

payments for 2024 if you expect to owe at least $1,000 in 

tax for 2024 (after subtracting your withholding and credits) and you expect your withholding and your credits to be 

less than the smaller of:

• 90% of the tax to be shown on your income tax return 

for 2024, or

4 Publication 721 (2023)
• 100% of the tax shown on your 2023 income tax return 

(110% of that amount if the adjusted gross income 

shown on the return was more than $150,000 

($75,000 if your filing status for 2024 will be married filing separately)). The return must cover all 12 months.

You don't have to pay estimated tax for 2024 if you were 

a U.S. citizen or resident alien for all of 2023 and you had 

no tax liability for the full 12-month 2023 tax year.

Pub. 505 and Form 1040-ES contain information that 

you can use to help you figure your estimated tax payments.

Filing Requirements

If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally don't 

have to file a federal income tax return for that year. The 

gross income filing requirements for the tax year are in the 

Instructions for Form 1040.

Children. If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes 

a survivor annuity for one or more children, each child's 

annuity counts as their own income (not yours) for federal 

income tax purposes.

If your child can be claimed as a dependent, treat the 

taxable part of their annuity as unearned income when applying the filing requirements for dependents.

Form CSF 1099-R. Form CSF 1099-R will be mailed 

by January 31 after the end of each tax year. It will show 

the total amount of the annuity you received in the past 

year. It should also show, separately, the survivor annuity 

for a child or children. Only the part that is each individual's survivor annuity should be shown on that individual's 

Form 1040 or 1040-SR.

If your Form CSF 1099-R doesn't separately show the 

amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 

1099-R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099-R.

You can also view and download your Form CSF 

1099-R by visiting the OPM website at 

servicesonline.opm.gov. To log in, you will need 

your retirement CSF claim number and password.

You may request a Summary of Payments, showing the amounts paid to you for your child(ren), 

from OPM by calling OPM's Retirement Information Office at 1-888-767-6738. You will need your CSF 

claim number and your social security number when you 

call.

Taxable part of annuity. To find the taxable part of a retiree's annuity when applying the filing requirements, see 

the discussion in Part II, Rules for Retirees, or Part III, 

Rules for Disability Retirement and Credit for the Elderly or 

the Disabled, whichever applies. To find the taxable part of 

each survivor annuity when applying the filing requirements, see the discussion in Part IV, Rules for Survivors of 

Federal Employees, or Part V, Rules for Survivors of Federal Retirees, whichever applies.

Part II

Rules for Retirees

This part of the publication is for retirees who retired on 

nondisability retirement.

If you retired on disability before you reached your 

minimum retirement age, see Part III, Rules for 

Disability Retirement and Credit for the Elderly or 

the Disabled. However, on the day after you reach your 

minimum retirement age, use the rules in this section to 

report your disability retirement and begin recovering your 

cost.

Annuity statement. The statement you received from 

OPM when your CSRS or FERS annuity was approved 

shows the commencing date (the annuity starting date), 

the gross monthly rate of your annuity benefit, and your total contributions to the retirement plan (your cost). You will 

use this information to figure the tax-free recovery of your 

cost.

Annuity starting date. If you retire from federal government service on a regular annuity, your annuity starting 

date is the commencing date on your annuity statement 

from OPM. If something delays payment of your annuity, 

such as a late application for retirement, it doesn't affect 

the date your annuity begins to accrue or your annuity 

starting date.

Gross monthly rate. This is the amount you were to 

get after any adjustment for electing a survivor's annuity or 

for electing the lump-sum payment under the alternative 

annuity option (if either applies) but before any deduction 

for income tax withholding, insurance premiums, etc.

Your cost. Your monthly annuity payment contains an 

amount on which you have previously paid income tax. 

This amount represents part of your contributions to the 

retirement plan. Even though you didn't receive the money 

that was contributed to the plan, it was included in your 

gross income for federal income tax purposes in the years 

it was taken out of your pay.

The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity 

statement from OPM. If you elected the alternative annuity 

option, it includes any deemed deposits and any deemed 

redeposits that were added to your lump-sum credit. (See 

Lump-sum credit under Alternative Annuity Option, later.)

If you repaid contributions that you had withdrawn from 

the retirement plan earlier, or if you paid into the plan to receive full credit for service not subject to retirement deductions, the entire repayment, including any interest, is a part 

of your cost. You can't claim an interest deduction for any 

interest payments. You can't treat these payments as voluntary contributions; they are considered regular employee contributions.

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Publication 721 (2023) 5
Recovering your cost tax free. How you figure the 

tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date.

• If your annuity starting date is before July 2, 1986, either the 3-Year Rule or the General Rule(both discussed later) applies to your annuity.

• If your annuity starting date is after July 1, 1986, and 

before November 19, 1996, you could have chosen to 

use either the General Rule or the Simplified Method 

(discussed later).

• If your annuity starting date is after November 18, 

1996, you must use the Simplified Method.

Under both the General Rule and the Simplified 

Method, each of your monthly annuity payments is made 

up of two parts: the tax-free part that is a return of your 

cost, and the taxable part that is the amount of each payment that is more than the part that represents your cost 

(unless such payment is used for purposes discussed under Distributions Used To Pay Insurance Premiums for 

Public Safety Officers, later). The tax-free part is a fixed 

dollar amount. It remains the same, even if your annuity is 

increased. Generally, this rule applies as long as you receive your annuity. However, see Exclusion limit, later.

Choosing a survivor annuity after retirement. If 

you retired without a survivor annuity and report your annuity under the Simplified Method, don't change your 

tax-free monthly amount even if you later choose a survivor annuity.

If you retired without a survivor annuity and report your 

annuity under the General Rule, you must figure the 

tax-free part of your annuity using a new exclusion percentage if you later choose a survivor annuity and take reduced annuity payments. To figure the new exclusion percentage, reduce your cost by the amount you previously 

recovered tax free. Figure the expected return as of the 

date the reduced annuity begins. For details on the General Rule, see Pub. 939.

Canceling a survivor annuity after retirement. If 

you retired with a survivor annuity payable to your spouse 

upon your death and you notify OPM that your marriage 

has ended, your annuity might be increased to remove the 

reduction for a survivor benefit. The increased annuity 

doesn't change the cost recovery you figured at the annuity starting date. The tax-free part of each annuity payment 

remains the same.

For more information about choosing or canceling 

a survivor annuity after retirement, contact OPM's 

Retirement Information Office at 1-888-767-6738.

Exclusion limit. Your annuity starting date determines 

the total amount of annuity payments that you can exclude 

from income over the years.

Annuity starting date after 1986. If your annuity 

starting date is after 1986, the total amount of annuity income that you (or the survivor annuitant) can exclude over 

the years as a return of your cost can't exceed your total 

cost. Annuity payments you or your survivors receive after 

the total cost in the plan has been recovered are generally 

fully taxable.

Example. Your annuity starting date is after 1986 and 

you exclude $100 a month under the Simplified Method. If 

your cost is $12,000, the exclusion ends after 10 years 

(120 months). Thereafter, your entire annuity is generally 

fully taxable.

Annuity starting date before 1987. If your annuity 

starting date is before 1987, you can continue to take your 

monthly exclusion figured under the General Rule or Simplified Method for as long as you receive your annuity. If 

you chose a joint and survivor annuity, your survivor can 

continue to take that same exclusion. The total exclusion 

may be more than your cost.

Deduction of unrecovered cost. If your annuity starting 

date is after July 1, 1986, and the cost of your annuity 

hasn't been fully recovered at your (or the survivor annuitant's) death, a deduction is allowed for the unrecovered 

cost. The deduction is claimed on your (or your survivor's) 

final tax return as an “Other Itemized Deduction.” If your 

annuity starting date is before July 2, 1986, no tax benefit 

is allowed for any unrecovered cost at death.

Simplified Method

If your annuity starting date is after November 18, 1996, 

you must use the Simplified Method to figure the tax-free 

part of your CSRS or FERS annuity. (OPM has figured the 

taxable amount of your annuity shown on your Form CSA 

1099-R using the Simplified Method.) You could have 

chosen to use either the Simplified Method or the General 

Rule if your annuity starting date is after July 1, 1986, but 

before November 19, 1996. The Simplified Method 

doesn't apply if your annuity starting date is before July 2, 

1986.

Under the Simplified Method, you figure the tax-free 

part of each full monthly payment by dividing your cost by 

a number of months based on your age. This number will 

differ depending on whether your annuity starting date is 

before November 19, 1996, or after November 18, 1996. If 

your annuity starting date is after 1997 and your annuity 

includes a survivor benefit for your spouse, this number is 

based on your combined ages.

Worksheet A. Use Worksheet A (near the end of this 

publication) to figure your taxable annuity. Be sure to keep 

the completed worksheet. It will help you figure your taxable amounts for later years.

Instead of Worksheet A, you can generally use 

the Simplified Method Worksheet in the Instructions for Form 1040 to figure your taxable annuity. 

However, you must use Worksheet A and Worksheet B in 

this publication if you chose the alternative annuity option, 

discussed later.

Line 2. See Your cost, earlier, for an explanation of 

your cost in the plan. If your annuity starting date is after 

November 18, 1996, and you chose the alternative annuity 

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6 Publication 721 (2023)
option (explained later), you must reduce your cost by the 

tax-free part of the lump-sum payment you received.

Line 3. The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate 

life expectancies in months. If your annuity starting date is 

after 1997, use:

• Table 1 for an annuity without a survivor benefit, or

• Table 2 for an annuity with a survivor benefit.

If your annuity starting date is before 1998, use Table 1.

Line 6. If you received contributions tax free before 

2023, the amount previously recovered tax free that you 

must enter on line 6 is the total amount from line 10 of last 

year's worksheet. If your annuity starting date is before 

November 19, 1996, and you chose the alternative annuity 

option, this amount includes the tax-free part of the 

lump-sum payment you received.

Example. Bill Smith retired from the federal government on March 31, 2023, under an annuity that will provide a survivor benefit for his wife, Kathy. His annuity starting date is April 1, 2023, the annuity is paid in arrears, and 

he received his first monthly annuity payment on May 1, 

2023. He must use the Simplified Method to figure the 

tax-free part of his annuity benefits.

Bill's monthly annuity benefit is $1,000. He had contributed $31,000 to his retirement plan and had received no 

distributions before his annuity starting date. At his annuity 

starting date, he was 65 and Kathy was 57.

Bill's completed Worksheet A is shown later. To complete line 3, he used Table 2 at the bottom of the worksheet and found that 310 is the number in the second column opposite the age range that includes 122 (his and 

Kathy's combined ages). Bill keeps a copy of the completed worksheet for his records. It will help him (and Kathy, if 

she survives him) figure the taxable amount of the annuity 

in later years.

Bill's tax-free monthly amount is $100. (See line 4 of the 

worksheet.) If he lives to collect more than 310 monthly 

payments, he will generally have to include in his gross income the full amount of any annuity payments received after 310 payments have been made.

If Bill doesn't live to collect 310 monthly payments and 

his wife begins to receive monthly payments, she will also 

exclude $100 from each monthly payment until 310 payments (Bill's and hers) have been collected. If she dies before 310 payments have been made, an “Other Itemized 

Deduction” will be allowed for the unrecovered cost on her 

final income tax return.

General Rule

If your annuity starting date is after November 18, 1996, 

you can't use the General Rule to figure the tax-free part of 

your CSRS or FERS annuity. If your annuity starting date 

is after July 1, 1986, but before November 19, 1996, you 

could have chosen to use either the General Rule or the 

Simplified Method. If your annuity starting date is before 

July 2, 1986, you could have chosen to use the General 

Rule only if you couldn't use the 3-Year Rule.

Under the General Rule, you figure the tax-free part of 

each full monthly payment by multiplying the initial gross 

monthly rate of your annuity by an exclusion percentage. 

Figuring this percentage is complex and requires the use 

of actuarial tables. For these tables and other information 

about using the General Rule, see Pub. 939.

3-Year Rule

If your annuity starting date was before July 2, 1986, you 

probably had to report your annuity using the 3-Year Rule. 

Under this rule, you excluded all the annuity payments 

from income until you fully recovered your cost. After your 

cost was recovered, all payments became fully taxable. 

You can't use another rule to again exclude amounts from 

income.

The 3-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986.

Alternative Annuity Option

If you are eligible, you may choose an alternative form of 

annuity. If you make this choice, you will receive a 

lump-sum payment equal to your contributions to the plan 

and a reduced monthly annuity. You are eligible to make 

this choice if you meet all of the following requirements.

• You are retiring, but not on disability.

• You have a life-threatening illness or other critical 

medical condition.

• You don't have a former spouse entitled to court-ordered benefits based on your service.

If you aren't eligible or don't choose this alternative annuity, you can skip the following discussion and go to Federal Gift Tax, later.

Lump-Sum Payment

The lump-sum payment you receive under the alternative 

annuity option generally has a tax-free part and a taxable 

part. The tax-free part represents part of your cost. The 

taxable part represents part of the earnings on your annuity contract. Your lump-sum credit (discussed later) may 

include a deemed deposit or redeposit that is treated as 

being included in your lump-sum payment even though 

you don’t actually receive such amounts. Deemed deposits and redeposits, which are described later under 

Lump-sum credit, are taxable to you in the year of retirement. Your taxable amount may therefore be more than 

the lump-sum payment you receive.

You must include the taxable part of the lump-sum payment in your income for the year you receive the payment 

unless you roll it over into another qualified plan or an IRA. 

If you don't have OPM transfer the taxable amount to an 

IRA or other plan in a direct rollover, tax will be withheld at 

a 20% rate. See Rollover Rules, later, for information on 

how to make a rollover.

Publication 721 (2023) 7
Worksheet A. Simplified Method for Bill Smith Keep for Your Records

See the instructions in Part II of this publication under Simplified Method.

1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, 

1040-SR, or 1040-NR, line 5a ............................................................... 1. $ 8,000

2. Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion.* See Your cost in Part II, 

Rules for Retirees, earlier ................................................................... 2. 31,000

Note. If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 

and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or 

annuity has changed). Otherwise, go to line 3.

3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the 

payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below ..... 3. 310

4. Divide line 2 by the number on line 3 .......................................................... 4. 100

5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date 

was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go 

to line 6 ................................................................................ 5. 800

6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of 

your worksheet for last year ................................................................. 6. 0

7. Subtract line 6 from line 2 ................................................................... 7. 31,000

8. Enter the smaller of line 5 or line 7 ........................................................... 8. 800

9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this 

amount to the total for Form 1040 or 1040-SR, line 5b. If you are a nonresident alien, enter this amount on line 1 

of Worksheet C. If your Form CSA 1099-R or Form CSF 1099-R shows a larger amount, use the amount figured 

on this line instead. If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums 

for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 ....... 9. $ 7,200

10. Was your annuity starting date before 1987? 

Yes. 

STOP

 Don't complete the rest of this worksheet.



No. Add lines 6 and 8. This is the amount you have recovered tax free through 2023. You will need this 

number if you need to fill out this worksheet next year ............................................. 10. 800

11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you will not have to complete this 

worksheet next year. The payments you receive next year will generally be fully taxable .................. 11. $ 30,200

Table 1 for Line 3 Above

IF your age on your 

annuity starting date was . . .

AND your annuity starting date was—

before November 19, 1996, 

THEN enter on line 3 . . .

after November 18, 1996, 

THEN enter on line 3 . . .

55 or under 300 360

56–60 260 310

61–65 240 260

66–70 170 210

71 or over 120 160

Table 2 for Line 3 Above

IF the annuitants' combined 

ages on your annuity starting 

date were . . . THEN enter on line 3 . . .

110 or under 410

111–120 360

121–130 310

131–140 260

141 or over 210

* A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died 

before August 21, 1996.

8 Publication 721 (2023)
OPM can make a direct rollover only up to the 

amount of the lump-sum payment. Therefore, to 

defer tax on the full taxable amount if it is more 

than the payment, you must add funds from another 

source.

The taxable part of the lump-sum payment doesn't 

qualify as a lump-sum distribution eligible for capital gain 

treatment or the 10-year tax option. It may also be subject 

to an additional 10% tax on early distributions if you separate from service before the calendar year in which you 

reach age 55, even if you reach age 55 in the year you receive the lump-sum payment. For more information, see 

Lump-Sum Distributions and Tax on Early Distributions in 

Pub. 575.

Worksheet B. Use Worksheet B (near the end of this 

publication) to figure the taxable part of your lump-sum 

payment. Be sure to keep the completed worksheet for 

your records.

To complete the worksheet, you will need to know the 

amount of your lump-sum credit and the present value of 

your annuity contract.

Lump-sum credit. Generally, this is the same amount 

as the lump-sum payment you receive (the total of your 

contributions to the retirement system). However, for purposes of the alternative annuity option, your lump-sum 

credit may also include deemed deposits and redeposits 

that OPM advanced to your retirement account so that you 

are given credit for the service they represent. Deemed 

deposits (including interest) are for federal employment 

during which no retirement contributions were taken out of 

your pay. Deemed redeposits (including interest) are for 

any refunds of retirement contributions that you received 

and didn't repay. You are treated as if you had received a 

lump-sum payment equal to the amount of your lump-sum 

credit and then had made a repayment to OPM of the advanced amounts.

Present value of your annuity contract. The 

present value of your annuity contract is figured using actuarial tables provided by the IRS.

CAUTION

!

If you are receiving a lump-sum payment under 

the alternative annuity option, you can write to the 

address below to find out the present value of 

your annuity contract.

Internal Revenue Service

Attn: Actuarial Group 2

TE/GE SE:T:EP:RA:T:A2

NCA-629

1111 Constitution Ave. NW

Washington, DC 20224-0002

Example. David Brown retired from the federal government in 2023, 1 month after his 55th birthday. He had contributed $31,000 to his retirement plan and chose to receive a lump-sum payment of that amount under the 

alternative annuity option. The present value of his annuity 

contract is $155,000.

The tax-free part and the taxable part of the lump-sum 

payment are figured using Worksheet B, as shown in the 

completed worksheet. The taxable part ($24,800) is also 

his net cost in the plan, which is used to figure the taxable 

part of his reduced annuity payments. See Reduced Annuity, later.

Lump-sum payment in installments. If you choose the 

alternative annuity option, you will usually receive the 

lump-sum payment in one installment. The overall tax 

treatment is explained at the beginning of this discussion.

How to report. Add any actual or deemed payment of 

your lump-sum credit (defined earlier) to the total for Form 

1040, 1040-SR, or 1040-NR, line 5a. Add the taxable 

amount to the total for Form 1040, 1040-SR, or 1040-NR, 

line 5b, unless you roll over the taxable part to your traditional IRA or a qualified retirement plan.

Reduced Annuity

If you have chosen to receive a lump-sum payment under 

the alternative annuity option, you will also receive reduced monthly annuity payments. These annuity payments each will have a tax-free and a taxable part. To figure the tax-free part of each annuity payment, you must 

use the Simplified Method (Worksheet A). For instructions 

Lump-Sum Payment for David Brown

See the instructions in Part II of this publication 

under Alternative Annuity Option.

Worksheet B. 

Keep for Your Records

1. Enter your lump-sum credit (your cost in the plan at the annuity starting date) ................. 1. $ 31,000

2. Enter the present value of your annuity contract ........................................ 2. 155,000

3. Divide line 1 by line 2 ............................................................ 3. 0.20

4. Tax-free amount. Multiply line 1 by line 3. (Caution: Don't include this amount on line 6 of 

Worksheet A in this publication.) .................................................... 4. $ 6,200

5. Taxable amount (net cost in the plan). Subtract line 4 from line 1. Include this amount in the total 

on Form 1040, 1040-SR, or 1040-NR, line 5b. Also, enter this amount on line 2 of Worksheet A in this 

publication ..................................................................... 5. $ 24,800

Publication 721 (2023) 9
on how to complete the worksheet, see Worksheet A under Simplified Method, earlier.

To complete Worksheet A, line 2, you must reduce your 

cost in the plan by the tax-free part of the lump-sum payment you received. Enter as your net cost on line 2 the 

amount from Worksheet B, line 5. Don't include the 

tax-free part of the lump-sum payment with other amounts 

recovered tax free (Worksheet A, line 6) when limiting your 

total exclusion to your total cost.

Example. The facts are the same as in the example for 

David Brown in the preceding discussion. In addition, David received 10 annuity payments in 2023 of $1,200 each. 

Using Worksheet A, he figures the taxable part of his annuity payments. He completes line 2 by reducing his 

$31,000 cost by the $6,200 tax-free part of his lump-sum 

payment. His entry on line 2 is his $24,800 net cost in the 

plan (the amount from Worksheet B, line 5). He doesn't include the tax-free part of his lump-sum payment on Worksheet A, line 6. An example of David's filled-in Worksheet 

A is shown in this publication.

Reemployment after choosing the alternative 

annuity option. If you chose this option when 

you retired and then you were reemployed by the 

federal government before retiring again, your Form CSA 

1099-R may show only the amount of your contributions to 

your retirement plan during your reemployment. If the 

amount on the form doesn't include all your contributions, 

disregard it and use your total contributions to figure the 

taxable part of your annuity payments.

Annuity starting date before November 19, 1996. If 

your annuity starting date is before November 19, 1996, 

and you chose the alternative annuity option, the taxable 

and tax-free parts of your lump-sum payment and your annuity payments are figured using different rules. Under 

those rules, you don't reduce your cost in the plan (Worksheet A, line 2) by the tax-free part of the lump-sum payment. However, you must include that tax-free amount 

with other amounts previously recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your 

total cost.

Federal Gift Tax

If, through the exercise or nonexercise of an election or 

option, you provide an annuity for your beneficiary at or after your death, you have made a gift. The gift may be taxable for gift tax purposes. The value of the gift is equal to 

the value of the annuity.

Joint and survivor annuity. If the gift is an interest in a 

joint and survivor annuity where only you and your spouse 

can receive payments before the death of the last spouse 

to die, the gift will generally qualify for the unlimited marital 

deduction. This will eliminate any gift tax liability with regard to that gift.

If you provide survivor annuity benefits for someone 

other than your current spouse, such as your former 

CAUTION

!

spouse, the unlimited marital deduction will not apply. This 

may result in a taxable gift.

More information. For information about the gift tax, 

see Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions.

Retirement During the Past Year

If you have recently retired, the following discussions covering annual leave, voluntary contributions, and community property may apply to you.

Annual leave. A payment for accrued annual leave received on retirement is a salary payment. It is taxable as 

wages in the tax year you receive it.

Voluntary contributions. Voluntary contributions to the 

retirement fund are those made in addition to the regular 

contributions that were deducted from your salary. They 

also include the regular contributions withheld from your 

salary after you have the years of service necessary for 

the maximum annuity allowed by law. Voluntary contributions aren't the same as employee contributions to the 

Thrift Savings Plan. See Thrift Savings Plan, later.

Additional annuity benefit. If you choose to receive 

an additional annuity benefit from your voluntary contributions, it is treated separately from the annuity benefit that 

comes from the regular contributions deducted from your 

salary. This separate treatment applies for figuring the 

amounts to be excluded from, and included in, gross income. It doesn't matter that you receive only one monthly 

check covering both benefits. Each year, you will receive a 

Form CSA 1099-R that will show how much of your total 

annuity received in the past year was from each type of 

benefit.

Figure the taxable and tax-free parts of your additional 

monthly benefits from voluntary contributions using the 

rules that apply to regular CSRS and FERS annuities, as 

explained earlier.

Refund of voluntary contributions. If you choose to 

receive a refund of your voluntary contributions plus accrued interest, the interest is taxable to you in the tax year 

it is distributed unless you roll it over to a traditional IRA or 

another qualified retirement plan. If you don't have OPM 

transfer the interest to a traditional IRA or other qualified 

retirement plan in a direct rollover, tax will be withheld at a 

20% rate. See Rollover Rules, later. The interest doesn't 

qualify as a lump-sum distribution eligible for capital gain 

treatment or the 10-year tax option. It may also be subject 

to an additional 10% tax on early distributions if you separate from service before the calendar year in which you 

reach age 55 (or before the earlier of age 50 or completing 

25 years of service under the plan if you are a qualified 

public safety employee). For more information, see 

Lump-Sum Distributions and Tax on Early Distributions in 

Pub. 575.

10 Publication 721 (2023)
Worksheet A. Simplified Method for David Brown Keep for Your Records

See the instructions in Part II of this publication under Simplified Method.

1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, 

1040-SR, or 1040-NR, line 5a ............................................................... 1. $ 12,000

2. Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion.* See Your cost in Part II, 

Rules for Retirees, earlier ................................................................... 2. 24,800

Note. If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 

and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or 

annuity has changed). Otherwise, go to line 3.

3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the 

payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below ..... 3. 360

4. Divide line 2 by the number on line 3 .......................................................... 4. 68.89

5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date 

was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go 

to line 6 ................................................................................ 5. 688.90

6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of 

your worksheet for last year ................................................................. 6. 0

7. Subtract line 6 from line 2 ................................................................... 7. 24,800

8. Enter the smaller of line 5 or line 7 ........................................................... 8. 688.90

9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this 

amount to the total for Form 1040 or 1040-SR, line 5b. If you are a nonresident alien, enter this amount on line 1 

of Worksheet C. If your Form CSA 1099-R or Form CSF 1099-R shows a larger amount, use the amount figured 

on this line instead. If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums 

for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 ....... 9. $ 11,311.10

10. Was your annuity starting date before 1987? 

Yes.

STOP

Don't complete the rest of this worksheet.



No. Add lines 6 and 8. This is the amount you have recovered tax free through 2023. You will need this 

number if you need to fill out this worksheet next year ............................................. 10. 688.90

11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you will not have to complete this 

worksheet next year. The payments you receive next year will generally be fully taxable .................. 11. $ 24,111.10

Table 1 for Line 3 Above

IF your age on your

annuity starting date was . . .

AND your annuity starting date was—

before November 19, 1996, 

THEN enter on line 3 . . .

after November 18, 1996, 

THEN enter on line 3 . . .

55 or under 300 360

56–60 260 310

61–65 240 260

66–70 170 210

71 or over 120 160

Table 2 for Line 3 Above

IF the annuitants' combined 

ages on your annuity starting 

date were . . . THEN enter on line 3 . . .

110 or under 410

111–120 360

121–130 310

131–140 260

141 or over 210

* A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died before August 21, 1996.

Publication 721 (2023) 11
Community property laws. State community property 

laws apply to your annuity. These laws will affect your income tax only if you file a return separately from your 

spouse.

Generally, the determination of whether your annuity is 

separate income (taxable to you) or community income 

(taxable to both you and your spouse) is based on your 

marital status and domicile when you were working. Regardless of whether you are now living in a community 

property state or a noncommunity property state, your current annuity may be community income if it is based on 

services you performed while married and domiciled in a 

community property state.

At any time, you have only one domicile even though 

you may have more than one home. Your domicile is your 

fixed and permanent legal home that you intend to use for 

an indefinite or unlimited period, and to which, when absent, you intend to return. The question of your domicile is 

mainly a matter of your intentions as indicated by your actions.

If your annuity is a mixture of community income and 

separate income, you must divide it between the two kinds 

of income. The division is based on your periods of service and domicile in community and noncommunity property states while you were married.

For more information, see Pub. 555, Community Property.

Reemployment After Retirement

If you retired from federal service and are later rehired by 

the federal government as an employee, you can continue 

to receive your annuity during reemployment. The employing agency will usually pay you the difference between 

your salary for your period of reemployment and your annuity. This amount is taxable as wages. Your annuity will 

continue to be taxed just as it was before. If you are still recovering your cost, you continue to do so. If you have recovered your cost, the annuity you receive while you are 

reemployed is generally fully taxable.

Nonresident Aliens

The following special rules apply to nonresident alien federal employees performing services outside the United 

States and to nonresident alien retirees and beneficiaries. 

A nonresident alien is an individual who isn't a citizen or a 

resident alien of the United States.

Special rule for figuring your total contributions. Your 

contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. You include government contributions that 

wouldn't have been taxable to you at the time they were 

contributed if they had been paid directly to you. For example, government contributions wouldn't have been taxable to you if, at the time made, your services were performed outside the United States. Thus, your cost is 

increased by these government contributions, and the 

benefits that you, or your beneficiary, must include in income are reduced.

This method of figuring your total contributions doesn't 

apply to any contributions the government made on your 

behalf after you became a citizen or a resident alien of the 

United States.

Limit on taxable amount. There is a limit on the taxable 

amount of payments received from the CSRS, the FERS, 

or the TSP by a nonresident alien retiree or nonresident 

alien beneficiary. Figure this limited taxable amount by 

multiplying the otherwise taxable amount by a fraction. 

The numerator of the fraction is the retiree's total U.S. 

Government basic pay, other than tax-exempt pay for 

services performed outside the United States. The denominator is the retiree's total U.S. Government basic pay 

for all services.

Basic pay includes regular pay plus any standby differential. It doesn't include bonuses, overtime pay, certain 

retroactive pay, uniform or other allowances, or lump-sum 

leave payments.

To figure the limited taxable amount of your CSRS or 

FERS annuity or your TSP distributions, use Worksheet C. 

(For an annuity, first complete Worksheet A in this publication.)

Limited Taxable 

Amount

for Nonresident Alien

Worksheet C. 

Keep for Your Records

1. Enter the otherwise taxable amount of 

the CSRS or FERS annuity (from line 9 

of Worksheet A or from Form CSA 

1099-R or CSF 1099-R) or TSP 

distributions (from Form 1099-R) ..... 1.

2. Enter the total U.S. Government basic 

pay other than tax-exempt pay for 

services performed outside the United 

States ........................... 2.

3. Enter the total U.S. Government basic 

pay for all services ................. 3.

4. Divide line 2 by line 3 ............... 4.

5. Limited taxable amount. Multiply 

line 1 by line 4. Enter this amount on 

Form 1040-NR, line 5b .............. 5.

Example 1. You are a nonresident alien who performed all services for the U.S. Government abroad as a 

nonresident alien. You retired and began to receive a 

monthly annuity of $200. Your total basic pay for all services for the U.S. Government was $100,000. All of your 

basic pay was tax exempt because it wasn't U.S. source 

income.

The taxable amount of your annuity using Worksheet A 

in this publication is $720. You are a nonresident alien, so 

you figure the limited taxable amount of your annuity using 

Worksheet C as follows.

12 Publication 721 (2023)
Limited Taxable 

Amount

for Nonresident 

Alien—Example 1

Worksheet C. 

Keep for Your Records

1. Enter the otherwise taxable amount of 

the CSRS or FERS annuity (from line 9 

of Worksheet A or from Form CSA 

1099-R or CSF 1099-R) or TSP 

distributions (from Form 1099-R) ..... 1. $ 720

2. Enter the total U.S. Government basic 

pay other than tax-exempt pay for 

services performed outside the United 

States ........................... 2. 0

3. Enter the total U.S. Government basic 

pay for all services ................. 3. 100,000

4. Divide line 2 by line 3 ............... 4. 0

5. Limited taxable amount. Multiply 

line 1 by line 4. Enter this amount on 

Form 1040-NR, line 5b .............. 5. 0

Example 2. You are a nonresident alien who performed services for the U.S. Government as a nonresident 

alien both within the United States and abroad. You retired 

and began to receive a monthly annuity of $240.

Your total basic pay for your services for the U.S. Government was $120,000; $40,000 was for work done in the 

United States and $80,000 was for your work done in a 

foreign country. The part of your total basic pay for your 

work done in a foreign country was tax exempt because it 

wasn't U.S. source income.

The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. You are a nonresident alien, so you figure the limited taxable amount of your 

annuity using Worksheet C as follows.

Limited Taxable 

Amount

for Nonresident 

Alien—Example 2

Worksheet C. 

Keep for Your Records

1. Enter the otherwise taxable amount of 

the CSRS or FERS annuity (from line 9 

of Worksheet A or from Form CSA 

1099-R or CSF 1099-R) or TSP 

distributions (from Form 1099-R) ..... 1. $ 1,980

2. Enter the total U.S. Government basic 

pay other than tax-exempt pay for 

services performed outside the United 

States ........................... 2. 40,000

3. Enter the total U.S. Government basic 

pay for all services ................. 3. 120,000

4. Divide line 2 by line 3 ............... 4. 0.333

5. Limited taxable amount. Multiply 

line 1 by line 4. Enter this amount on 

Form 1040-NR, line 5b .............. 5. 659

Thrift Savings Plan (TSP)

Generally, all of the money in your TSP account is taxed 

as ordinary income when you receive it. (However, see 

Roth TSP balance and Uniformed services TSP accounts 

next.) This is because neither the contributions to your traditional TSP balance nor its earnings have been included 

previously in your taxable income. The way that you withdraw your account balance determines when you must 

pay the tax.

Roth TSP balance. The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into 

your TSP account. This means Roth TSP contributions are 

included in your income. The contribution limits are the 

same as the traditional TSP. You can elect to have part or 

all of your TSP contributions designated as a Roth TSP. 

Agency contributions will be part of your traditional TSP 

balance. Also, you can't roll over any portion of your traditional TSP into your Roth TSP.

Qualified distributions from your Roth TSP aren't included in income. This applies to both your contributions to 

the account and income earned on that account. A qualified distribution is generally a distribution that is:

• Made after a 5-tax-year period of participation; and

• Made on or after the date you reach age 591/2, made 

to a beneficiary or your estate on or after your death, 

or attributable to your being disabled.

For more information, go to the TSP website, TSP.gov, 

or the TSP Service Office. See Pub. 575 for more information about designated Roth accounts.

Uniformed services TSP accounts. If you have a uniformed services TSP account that includes contributions 

from combat pay, the distributions attributable to those 

contributions are tax exempt. However, any earnings on 

those contributions to a traditional TSP balance are subject to tax when they are distributed. See Roth TSP balance, discussed previously, to get more information about 

Roth contributions. The statement you receive from the 

TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the 

year. You can get more information from the TSP website, 

TSP.gov, or the TSP Service Office.

Direct rollover by the TSP. If you ask the TSP to transfer 

any part of the money in your account, from traditional 

contributions and earnings, to a traditional IRA or other 

qualified retirement plan, the tax on that part is deferred 

until you receive payments from the traditional IRA or 

other plan. However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions 

and earnings. Also, see Rollover Rules, later.

Direct rollover by the TSP to a Roth IRA. If you ask the 

TSP to transfer any part of the money in your account, 

from traditional contributions and earnings, to a Roth IRA, 

the amount transferred will be taxed in the current year. 

However, see the following Note for a discussion on direct 

rollovers by the TSP of Roth contributions and earnings. 

Publication 721 (2023) 13
Also, see Rollovers to Roth IRAs, later, for more information.

Note. A direct rollover of your Roth contributions and 

earnings in your TSP account if certain conditions are met 

(see Roth TSP balance, earlier) to a Roth 401(k), Roth 

403(b), Roth 457(b), or Roth IRA aren't subject to tax 

when they are transferred or when you receive payments 

from those accounts at a later date. This is because you 

already paid tax on those contributions. You can't roll over 

Roth contributions and earnings in your TSP account to a 

traditional IRA.

TSP annuity. If you ask the TSP to buy an annuity with 

the money in your account from traditional contributions 

and earnings, the annuity payments are taxed when you 

receive them. The payments aren't subject to the additional 10% tax on early distributions, even if you are under 

age 55 when they begin. However, there is no tax on the 

annuity payments if the annuity is purchased using the 

money in your account from Roth contributions and earnings if certain conditions are met. See Roth TSP balance, 

earlier. This is because you already paid tax on those contributions.

Cash withdrawals. If you withdraw any of the money in 

your TSP account from traditional contributions and earnings, it is generally taxed as ordinary income when you receive it unless you roll it over into a traditional IRA or other 

qualified plan. (See Rollover Rules, later.) If you receive 

your entire TSP account balance in a single tax year, you 

may be able to use the 10-year tax option to figure your 

tax if the plan participant was born before January 2, 

1936. See Lump-Sum Distributions in Pub. 575 for details. 

However, there is no tax if you withdraw money in your 

TSP account from Roth contributions and earnings if certain conditions are met. See Roth TSP balance, earlier.

If you receive a single payment or you choose to receive your account balance in monthly payments over a 

period of less than 10 years, the TSP must generally withhold 20% for federal income tax. If you choose to receive 

your account balance in monthly payments over a period 

of 10 or more years or a period based on your life expectancy, withholding is determined using the instructions and 

tables provided in Pub. 15–T, based on information you 

provide on Form W-4P. If you don’t submit Form W-4P 

then for a payee who received a first periodic payment in 

2023, the TSP must withhold as if you were a single filer 

who made no entries in Step 2, Step 3, and Step 4 of 

Form W-4P. For the default 2023 withholding for a payee 

who first received a periodic payment before 2023, see 

Payee fails to furnish Form W-4P or provides an incorrect 

SSN on Form W-4P, in Pub. 15-T. See also Withholding 

from Thrift Savings Plan payments, earlier, under Tax 

Withholding and Estimated Tax in Part I. However, there is 

no withholding requirement for amounts withdrawn from 

your TSP account that is from Roth contributions and 

earnings if certain conditions are met. See Roth TSP balance, earlier, for a discussion of those conditions.

Tax on early distributions. Any money paid to you 

from your TSP account before you reach age 591/2 may be 

subject to an additional 10% tax on early distributions. 

However, this additional tax doesn't apply in certain situations, including any of the following.

• You receive the distribution and separate from government service during or after the calendar year in which 

you reach age 55.

• You are a qualified public safety employee and you 

have completed at least 25 years of service under the 

plan or have attained 50 years of age (whichever is 

earlier).

• You choose to receive your account balance in substantially equal payments (not less than yearly) based 

on your life expectancy.

• You are totally and permanently disabled.

• You receive amounts from your Roth contributions that 

represent a return of your cost (after-tax money). The 

earnings may be subject to the 10% tax depending on 

whether you met certain conditions. See Roth TSP 

balance, earlier.

Note. Changes to the initial distribution method or 

amount under the equal payment exception may result in 

a recapture tax.

For more information, see Tax on Early Distributions in 

Pub. 575.

Outstanding loan. If the TSP declares a distribution from 

your account because money you borrowed hasn't been 

repaid when you separate from government service, your 

account is reduced and the amount of the distribution 

(your unpaid loan balance and any unpaid interest), from 

traditional contributions and earnings, is taxed in the year 

declared. The distribution may also be subject to the additional 10% tax on early distributions. However, the tax will 

be deferred if you make a rollover contribution to a traditional IRA or other qualified plan equal to the declared distribution amount. See Rollover Rules, later.

If you withdraw any money from your TSP account in 

that same year, the TSP must withhold income tax of 20% 

of the total of the declared distribution and the amount 

withdrawn. However, no withholding is required for portions of the distribution that is from Roth contributions and 

earnings if certain conditions are met. See Roth TSP balance, earlier.

More information. For more information about the TSP, 

see Summary of the Thrift Savings Plan. Also, see Tax 

Rules about TSP Payments and Distributions. These publications are available on the TSP website at TSP.gov/

forms. You may also call the TSP at 877–968–3778. For 

participants who are deaf, hard of hearing, or have a 

speech disability, dial 711 from any telephone.

Rollover Rules

If you withdraw cash or other assets from a qualified retirement plan in an eligible rollover distribution, you can generally defer tax on the distribution by rolling it over to another qualified retirement plan, a traditional IRA, or, after 2 

years of participation in a SIMPLE IRA sponsored by your 

14 Publication 721 (2023)
employer, a SIMPLE IRA under that plan. You don't include the amount rolled over in your income, and you can't 

take a deduction for it. The amount rolled over is taxed 

later as the new program pays that amount to you. If you 

roll over amounts into a traditional IRA, later distributions 

of these amounts from the traditional IRA don't qualify for 

the capital gain or the 10-year tax option. However, capital 

gain treatment or the 10-year tax option will be restored if 

the traditional IRA contains only amounts rolled over from 

a qualified plan and these amounts are rolled over from 

the traditional IRA into a qualified retirement plan. To qualify for the capital gain treatment or 10-year tax option, the 

plan participant must have been born before January 2, 

1936.

You can also roll over a distribution from a qualified retirement plan into a Roth IRA. Although the transfer of a 

distribution into a Roth IRA is considered a rollover for 

Roth IRA purposes, it isn't a tax-free transfer unless you 

are rolling over amounts from Roth contributions and earnings. See Rollovers to Roth IRAs, later, for more information.

Rollovers to SIMPLE retirement accounts. You can roll 

over amounts from a qualified retirement plan or an IRA 

into a SIMPLE retirement account as follows.

1. During the first 2 years of participation in a SIMPLE 

retirement account, you may roll over amounts from 

one SIMPLE retirement account into another SIMPLE 

retirement account.

2. After the first 2 years of participation in a SIMPLE retirement account, you may roll over amounts from a 

SIMPLE retirement account, a qualified retirement 

plan, or an IRA into a SIMPLE retirement account.

Qualified retirement plan. For this purpose, a qualified 

retirement plan is generally:

• A qualified employee plan,

• A qualified employee annuity,

• A tax-sheltered annuity plan (403(b) plan), or

• An eligible state or local government section 457 deferred compensation plan.

The CSRS, FERS, and TSP are considered qualified retirement plans.

Distributions eligible for rollover treatment. If you receive a refund of your CSRS or FERS contributions when 

you leave government service, you can roll over any interest you receive on the contributions. You can't roll over any 

part of your CSRS or FERS annuity payments.

You can roll over a distribution of any part of your TSP 

account balance except:

1. A distribution of your account balance that you 

choose to receive in (typically monthly, but not less 

frequently than annually) payments over:

a. Your life expectancy,

b. The joint life expectancies of you and your beneficiary, or

c. A period of 10 years or more;

2. A required minimum distribution generally beginning 

at age 73;

3. A declared distribution because of an unrepaid loan, if 

you haven't separated from government service (see 

Outstanding loan under Thrift Savings Plan, earlier); 

or

4. A hardship distribution.

In addition, a distribution to your beneficiary isn’t generally treated as an eligible rollover distribution. However, 

see Qualified domestic relations order (QDRO), Rollovers 

by surviving spouse, and Rollovers by nonspouse beneficiary, later.

Direct rollover option. You can choose to have OPM or 

the TSP transfer any part of an eligible rollover distribution 

directly to another qualified retirement plan that accepts 

rollover distributions or to a traditional IRA or Roth IRA.

There is an automatic rollover requirement for mandatory distributions. A mandatory distribution is a distribution 

made:

• Without your consent; and

• Before you reach age 62 or normal retirement age, 

whichever is later.

The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. You can choose to have the distribution paid directly 

to you or rolled over directly to your traditional or Roth IRA 

or another qualified retirement plan. If you don't make this 

choice, OPM will automatically roll over the distribution 

into an IRA of a designated trustee or issuer.

No tax withheld. If you choose the direct rollover option or have an automatic rollover, no tax will be withheld 

from any part of the distribution that is directly paid to the 

trustee of the other plan. However, if the rollover is to a 

Roth IRA, you may want to choose to have tax withheld 

because any amount rolled over is generally included in 

income. Any part of the eligible rollover distribution paid to 

you is subject to withholding at a 20% rate. Direct rollover 

amounts from Roth contributions and earnings don't have 

tax withheld because you already paid tax on those 

amounts.

Payment to you option. If an eligible rollover distribution 

is paid to you, OPM or the TSP must withhold 20% for income tax even if you plan to roll over the distribution to another qualified retirement plan, or traditional or Roth IRA. 

However, the full amount is treated as distributed to you 

even though you actually receive only 80%. You must generally include in income any part (including the part withheld) that you don't roll over within 60 days to another 

qualified retirement plan or to a traditional IRA. Rollovers 

to Roth IRAs are generally included in income. Eligible 

rollover distributions that are from Roth contributions don't 

have tax withheld because you already paid tax on those 

amounts.

If you leave government service before the calendar 

year in which you reach age 55 and are under age 591/2 

Publication 721 (2023) 15
when a distribution is paid to you, you may have to pay an 

additional 10% tax on any part, including any tax withheld, 

that you don't roll over. If you are a qualified public safety 

employee and you have completed at least 25 years of 

service under the plan or have attained 50 years of age 

(whichever is earlier), the additional tax doesn't apply to 

you. Distributions from Roth contributions will not be subject to the 10% additional tax because they are a return of 

your cost (after-tax money). Earnings from those contributions may be subject to the 10% additional tax if certain 

conditions aren't met. See Roth TSP balance, earlier. 

Also, see Tax on Early Distributions in Pub. 575.

Exception to withholding. Withholding from an eligible rollover distribution paid to you isn't required if the distributions for your tax year total less than $200.

Partial rollovers. A lump-sum distribution may qualify 

for capital gain treatment or the 10-year tax option if the 

plan participant was born before January 2, 1936. See 

Lump-Sum Distributions in Pub. 575. However, if you roll 

over any part of the distribution, the part you keep doesn't 

qualify for this special tax treatment.

Rolling over more than amount received. If you 

want to roll over more of an eligible rollover distribution 

than the amount you received after income tax was withheld, you will have to add funds from some other source 

(such as your savings or borrowed amounts).

Example. You left government service at age 53. On 

February 3, 2023, you receive an eligible rollover distribution of $10,000 from your TSP account, which is from traditional contributions and earnings. The TSP withholds 

$2,000, so you actually receive $8,000. If you want to roll 

over the entire $10,000 to postpone including that amount 

in your income, you will have to get $2,000 from some 

other source and add it to the $8,000 you actually received.

If you roll over only $8,000, you must include in your income the $2,000 not rolled over. Also, you may be subject 

to the 10% additional tax on the $2,000.

Time for making rollover. You must generally complete 

the rollover of an eligible rollover distribution paid to you by 

the 60th day following the day on which you receive the 

distribution.

The IRS may waive the 60-day requirement where the 

failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or 

other event beyond your reasonable control. There are 

three ways to obtain a waiver of the 60-day requirement.

• You qualify for an automatic waiver.

• You self-certify that you met the requirements of a 

waiver.

• You request and receive a letter ruling under the appropriate IRS Revenue Procedure. This Revenue Procedure is generally published in the first Internal Revenue Bulletin of the year.

For more information about requesting a waiver of the 

60-day rollover requirement, rollovers permitted between 

the various types of retirement plans (including IRAs), and 

other topics regarding rollovers, see Rollovers in Pub. 

590-A. For information about the extended rollover period 

for a qualified plan loan offset, see Plan loan offset under 

Time for making rollover in Pub. 575.

A letter ruling isn't required if a financial institution receives the rollover funds during the 60-day rollover period, 

you follow all procedures required by the financial institution, and, solely due to an error on the part of the financial 

institution, the funds aren't deposited into an eligible retirement account within the 60-day rollover period.

Frozen deposits. If an amount distributed to you becomes a frozen deposit in a financial institution during the 

60-day period after you receive it, the rollover period is extended. An amount is a frozen deposit if you can't withdraw it because of either:

• The bankruptcy or insolvency of the financial institution, or

• Any requirement imposed by the state in which the institution is located because of the bankruptcy or insolvency (or threat of it) of one or more financial institutions in the state.

The 60-day rollover period is extended by the period for 

which the amount is a frozen deposit and doesn't end earlier than 10 days after the amount is no longer a frozen deposit.

Qualified domestic relations order (QDRO). You may 

be able to roll over tax free all or part of a distribution you 

receive from the CSRS, the FERS, or the TSP under a 

court order in a divorce or similar proceeding. You must 

receive the distribution as the government employee's 

spouse or former spouse (not as a nonspousal beneficiary). The rollover rules apply to you as if you were the 

employee. You can roll over the distribution if it is an eligible rollover distribution (described earlier) and it is made 

under a QDRO or, for the TSP, a qualifying order.

A QDRO or qualifying order is a judgment, decree, or 

order relating to payment of child support, alimony, or marital property rights. The payments must be made to a 

spouse, former spouse, child, or other dependent of a participant in the plan.

The order must contain certain information, including 

the amount or percentage of the participant's benefits to 

be paid to each payee. It can't require the plan to pay benefits in a form not offered by the plan, nor can it require the 

plan to pay increased benefits.

A distribution that is paid to a child or dependent under 

a QDRO or a qualifying order is taxed to the plan participant.

Rollovers by surviving spouse. You may be able to roll 

over tax free all or part of the CSRS, FERS, or TSP distribution you receive as the surviving spouse of a deceased 

employee or retiree. The rollover rules apply to you as if 

you were the employee or retiree. You can generally roll 

over the distribution into a qualified retirement plan or an 

IRA. An amount rolled over to a Roth IRA isn't tax free unless you are rolling over amounts from Roth contributions 

and earnings. See Rollovers to Roth IRAs, later.

16 Publication 721 (2023)
A distribution paid to a beneficiary other than the employee's surviving spouse is generally not an eligible rollover distribution. However, see Rollovers by nonspouse 

beneficiary next.

Rollovers by nonspouse beneficiary. You may be able 

to roll over tax free all or a portion of a distribution you receive from the CSRS, FERS, or TSP of a deceased employee or retiree if you are a designated beneficiary (other 

than a surviving spouse) of the employee or retiree. The 

distribution must be a direct trustee-to-trustee transfer to 

your IRA that was set up to receive the distribution. The 

transfer will be treated as an eligible rollover distribution 

and the IRA will be treated as an inherited IRA. An amount 

rolled over to a Roth IRA isn't tax free. See Rollovers to 

Roth IRAs, later. For information on inherited IRAs, see 

Pub. 590-A.

How to report. On your Form 1040, 1040-SR, or 

1040-NR, report the total distributions from the CSRS, 

FERS, or TSP on line 5a. Report the taxable amount of the 

distributions (total distribution less the amount rolled over) 

on line 5b. Also, enter “Rollover” next to line 5b.

If the rollover was made to a Roth IRA, see Rollovers to 

Roth IRAs, later, for reporting the rollover on your return.

Written explanation to recipients. The TSP or OPM 

must provide a written explanation to you within a reasonable period of time before making an eligible rollover distribution to you. It must tell you about all of the following.

• Your right to have the distribution paid tax free directly 

to another qualified retirement plan or to a traditional 

IRA.

• The requirement to withhold tax from the distribution, 

unless it is from your Roth contributions and earnings, 

if it isn't directly rolled over.

• The nontaxability of any part of the distribution that 

you roll over within 60 days after you receive the distribution.

• Other qualified retirement plan rules that apply, including those for lump-sum distributions, alternate payees, 

and cash or deferred arrangements.

• How the distribution rules of the plan to which you roll 

over the distribution may differ in their restrictions and 

tax consequences from the rules that apply to the plan 

making the distribution.

Note. Rollovers to Roth IRAs aren’t tax free and are included in income unless it is from your Roth contributions 

and earnings. See Rollovers to Roth IRAs, later.

Reasonable period of time. The TSP or OPM must 

provide you with a written explanation no earlier than 90 

days and no later than 30 days before the distribution is 

made. However, you can choose to have the TSP or OPM 

make a distribution less than 30 days after the explanation 

is provided, as long as the following two requirements are 

met.

• You have the opportunity, for at least 30 days after the 

explanation is provided, to consider whether or not 

you want to make a direct rollover.

• The information you receive clearly states that you 

have the right to have 30 days to make a decision.

Contact the TSP or OPM if you have any questions about 

this information.

Rollovers to Roth IRAs

You can roll over distributions directly from the CSRS, 

FERS, and TSP to a Roth IRA.

You must include in your gross income distributions 

from the CSRS, FERS, and TSP that you would have had 

to include in income if you hadn't rolled them over into a 

Roth IRA. You don't include in gross income any part of a 

distribution that is a return of contributions that were taxable to you when paid. In addition, the 10% tax on early distributions doesn't apply.

Any amount, which is from traditional TSP contributions 

and earnings, rolled over to a Roth IRA is subject to the 

same rules for converting a traditional IRA into a Roth IRA. 

For more information, see Converting From Any Traditional 

IRA Into a Roth IRA in chapter 1 of Pub. 590-A.

How to report. A rollover to a Roth IRA isn't a tax-free 

distribution unless you are rolling over after-tax contributions you made such as your Roth contributions and earnings. Report a rollover from a qualified retirement plan to a 

Roth IRA on Form 1040, 1040-SR, or 1040-NR, lines 5a 

and 5b.

Enter the total amount of the distribution before income 

tax or deductions were withheld on Form 1040, 1040-SR, 

or 1040-NR, line 5a. This amount is shown in box 1 of 

Form 1099-R. From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were 

taxable to you when made. From that result, subtract the 

amount of any qualified rollover from a designated Roth 

account. Enter the remaining amount, even if zero, on 

Form 1040, 1040-SR, or 1040-NR, line 5b.

If you must include any amount in your income, 

you may have to increase your withholding or 

make estimated tax payments. See Pub. 505.

Choosing the right option. Table 1 may help you decide 

which distribution option to choose. Carefully compare the 

effects of each option.

CAUTION

!

Publication 721 (2023) 17
Comparison of Payment to You 

Versus Direct Rollover

Table 1.

Affected 

Item

Result of a Payment to 

You

Result of a Direct 

Rollover

Withholding The payer must withhold 

20% of the taxable part.

There is no 

withholding. 

However, you may 

want to choose 

withholding on a 

rollover from your 

traditional 

contributions and 

earnings to a Roth 

IRA.

Additional 

tax

If you are under age 591/2, 

a 10% additional tax may 

apply to the taxable part 

(including an amount equal 

to the tax withheld) that 

isn't rolled over. 

There is no 10% 

additional tax. See 

Tax on early 

distributions, 

earlier.

When to 

report as 

income

Any taxable part (including 

the taxable part of any 

amount withheld) not rolled 

over is income to you in the 

year paid.

Any taxable part 

isn't income to you 

until later 

distributed to you 

from the new plan 

or IRA. However, 

see Rollovers to 

Roth IRAs, earlier, 

for an exception.

Distributions Used To Pay Insurance 

Premiums for Public Safety Officers

If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude 

from income distributions made from an eligible retirement 

plan that are used to pay the premiums for accident or 

health insurance or long-term care insurance. You can do 

this only if you retired because of disability or because you 

reached normal retirement age. The premiums can be for 

coverage for you, your spouse, or dependents. The distribution must be from a plan maintained by the employer 

from which you retired as a public safety officer. The distribution can be made directly from the plan to the insurance 

provider of the accident or health plan or long-term care 

insurance contract or the distribution can be made to you 

to pay to the provider of the accident or health plan or 

long-term care insurance. You can exclude from income 

the lesser of the amount of the insurance premiums or 

$3,000. You can only make this election for amounts that 

would otherwise be included in your income. The amount 

excluded from your income can't be used to claim a medical expense deduction.

For this purpose, an eligible retirement plan is a governmental plan that is:

• A qualified trust,

• A section 403(a) plan,

• A section 403(b) annuity, or

• A section 457(b) plan.

The CSRS and FERS are considered eligible retirement 

plans.

You can exclude from income only the lesser of 

the amount of the premiums paid or $3,000. This 

is true if the distribution was made to the provider 

of the accident or health plan or long-term care insurance 

contract or if the distribution was made to you and then 

paid to the provider of the accident or health plan or 

long-term care insurance. If you received a distribution 

from your eligible retirement plan, and you used part of 

that distribution to pay premiums for an accident or health 

plan or long-term care insurance contract, you can still exclude from income only the lesser of the amount of the 

premiums or $3,000. The rest of the distribution is taxable 

to you and should be reported as described next.

How to report. If you make this election, reduce the otherwise taxable amount of your annuity by the amount excluded. The taxable annuity shown on Form CSA 1099-R 

doesn't reflect this exclusion. Report your total distributions on Form 1040, 1040-SR, or 1040-NR, line 5a. Report the taxable amount on Form 1040, 1040-SR, or 

1040-NR, line 5b. Enter “PSO” next to the appropriate line 

on which you report the taxable amount.

If you are retired on disability and reporting your disability pension on line 1h of Form 1040, 1040-SR, or 

1040-NR, include only the taxable amount on that line and 

enter “PSO” and the amount excluded on the dotted line 

next to the applicable line.

How To Report Benefits

If you received annuity benefits that aren't fully taxable, report the total received for the year on Form 1040, 

1040-SR, or 1040-NR, line 5a. Also, include on that line 

the total of any other pension plan payments (even if fully 

taxable, such as those from the TSP) that you received 

during the year in addition to the annuity. Report the taxable amount of these total benefits on Form 1040, 

1040-SR, or 1040-NR, line 5b. However, if you use Form 

4972, Tax on Lump-Sum Distributions, to report the tax on 

any amount, don't include that amount on line 5a or 5b. Instead, follow the Form 4972 instructions.

If you received only fully taxable payments from your retirement, the TSP, or other pension plan, report on Form 

1040, 1040-SR, or 1040-NR, line 5b, the total received for 

the year (except for any amount reported on Form 4972). 

No entry is required on Form 1040, 1040-SR, or 1040-NR, 

line 5a.

CAUTION

!

18 Publication 721 (2023)
Part III

Rules for Disability

Retirement and

Credit for the Elderly or

the Disabled

This part of the publication is for federal employees and 

retirees who receive disability benefits under the CSRS, 

the FERS, or other federal programs. It also explains the 

tax credit available to certain taxpayers because of age or 

disability.

Disability Annuity

If you retired on disability, the disability annuity you receive 

from the CSRS or FERS is taxable as wages until you 

reach minimum retirement age, as explained in this section. However, beginning on the day after you reach minimum retirement age, your payments are treated as a retirement annuity and you can begin to recover the cost of 

your annuity under the rules discussed earlier in Part II, 

Rules for Retirees.

If you find that you could have started your recovery in 

an earlier year for which you have already filed a return, 

you can still start your recovery of contributions in that earlier year. To do so, file an amended return for that year and 

each succeeding year for which you have already filed a 

return. Generally, an amended return for any year must be 

filed within 3 years after the due date for filing your original 

return for that year.

Minimum retirement age. This is the age at which you 

could first receive an annuity were you not disabled. This 

is generally based on your age and length of service.

Retirement under the Civil Service Retirement System (CSRS). In most cases, under the CSRS, the minimum combinations of age and service for retirement are:

• Age 55 with 30 years of service;

• Age 60 with 20 years of service;

• Age 62 with 5 years of service; or

• For service as a law enforcement officer, firefighter, 

nuclear materials courier, or air traffic controller, age 

50 with 20 years of covered service.

Retirement under the Federal Employees Retirement System (FERS). In most cases, the minimum age 

for retirement under the FERS is between ages 55 and 57 

with at least 10 years of service. With at least 5 years of 

service, your minimum retirement age is age 62. Your minimum retirement age with at least 10 years of service is 

shown in Table 2.

FERS Minimum Retirement Age 

(MRA) With 10 Years of Service

Table 2.

IF you were born in. . . THEN your MRA is. . .

1947 or earlier ............ 55 years.

1948 ................... 55 years, 2 months.

1949 ................... 55 years, 4 months.

1950 ................... 55 years, 6 months.

1951 ................... 55 years, 8 months.

1952 ................... 55 years, 10 months.

1953 to 1964 ............. 56 years.

1965 ................... 56 years, 2 months.

1966 ................... 56 years, 4 months.

1967 ................... 56 years, 6 months.

1968 ................... 56 years, 8 months.

1969 ................... 56 years, 10 months.

1970 or later .............. 57 years.

For service as a law enforcement officer, member of the 

Capitol or Supreme Court Police, firefighter, nuclear materials courier, or air traffic controller, the minimum retirement age is age 50 with 20 years of covered service or 

any age with 25 years of covered service.

How to report. You must report all your disability annuity 

payments received before minimum retirement age on 

Form 1040, 1040-SR, or Form 1040-NR, line 1h. Disability 

annuity payments received after you reach that age are reported as discussed under How To Report Benefits, earlier in Part II.

Withholding. For income tax withholding purposes, a 

disability annuity is treated the same as a nondisability annuity. This treatment also applies to disability payments received before minimum retirement age even though these 

payments are shown as wages on your return. See Tax 

Withholding and Estimated Tax in Part I.

Other Benefits

The tax treatment of certain other benefits is explained in 

this section.

Federal Employees' Compensation Act (FECA). 

FECA payments you receive for personal injuries or sickness resulting from the performance of your duties are like 

workers' compensation. They are tax exempt and aren't 

treated as disability income or annuities. However, payments you receive while your claim is being processed, including pay while on sick leave and continuation of pay for 

up to 45 days, are taxable.

Sick pay or disability payments repaid. If you repay 

sick leave or disability annuity payments you received and 

included in income in an earlier year to be eligible for nontaxable FECA benefits for that period, you can’t deduct the 

amount you repay.

If you repay sick leave or disability annuity payments in 

the same year you receive them, the repayment reduces 

your taxable sick leave pay or disability annuity.

Publication 721 (2023) 19
Terrorist attack. Disability payments for injuries incurred 

as a direct result of a terrorist attack directed against the 

United States (or its allies) aren't included in income. For 

more information about payments to survivors of terrorist 

attacks, see Pub. 3920, Tax Relief for Victims of Terrorist 

Attacks.

Military actions. Disability payments for injuries incurred 

as a direct result of a military action involving the Armed 

Forces of the United States and resulting from actual or 

threatened violence or aggression against the United 

States or any of its allies aren't included in income.

Disability resulting from military service injuries. If 

you received tax-exempt benefits from the Department of 

Veterans Affairs for personal injuries resulting from active 

service in the U.S. Armed Forces and later receive a 

CSRS or FERS disability annuity for disability arising from 

the same injuries, you can't treat the disability annuity payments as tax-exempt income. They are subject to the rules 

described earlier under Disability Annuity.

Payment for unused annual leave. If you retire on disability, any payment for your unused annual leave is taxed 

as wages in the tax year you receive the payment.

Credit for the Elderly or the Disabled

You can take the credit for the elderly or the disabled if:

• You are a qualified individual, and

• Your income isn't more than certain limits.

You are a qualified individual for this credit if you are a 

U.S. citizen or resident alien and, at the end of the tax 

year, you are:

1. Age 65 or older; or

2. Under age 65, retired on permanent and total disability, and:

a. Received taxable disability income, and

b. Didn't reach mandatory retirement age (defined 

later) before the tax year.

You are retired on permanent and total disability if:

• You were permanently and totally disabled when you 

retired, and

• You retired on disability before the close of the tax 

year.

Even if you don't retire formally, you may be considered 

retired on disability when you have stopped working because of your disability.

Permanently and totally disabled. You are permanently and totally disabled if you can't engage in any substantial gainful activity because of your physical or mental 

condition. A physician must certify that the condition has 

lasted or can be expected to last continuously for 12 

months or more, or that the condition can be expected to 

result in death. See Physician's statement, next. Substantial gainful activity is the performance of significant duties 

over a reasonable period of time while working for pay or 

profit, or in work generally done for pay or profit.

Physician's statement. If you are under age 65, you 

must have your physician complete a statement certifying 

that you were permanently and totally disabled on the 

date you retired. You must keep this statement for your tax 

records. For this purpose, you can use the Physician's 

Statement in the Instructions for Schedule R (Form 1040).

Mandatory retirement age. This is the age set by your 

employer at which you would have had to retire if you 

hadn't become disabled. There is no mandatory retirement age for most federal employees. However, there is a 

mandatory retirement age for the following federal employees.

• Air traffic controllers appointed after May 15, 1972, by 

the Department of Transportation or the Department of 

Defense must generally retire by the last day of the 

month when they reach age 56.

• Federal firefighters, law enforcement officers, nuclear 

materials couriers, or members of the Capitol or Supreme Court Police who are otherwise eligible for immediate retirement must generally retire by the last 

day of the month they reach age 57 or, if later, complete 20 years of service.

Figuring the credit. If you figure the credit yourself, first 

fill out the front of Schedule R (Form 1040). Next, fill out 

Part III of the schedule.

If you want the IRS to figure your tax and credits, including the credit for the elderly or the disabled, see the Instructions for Schedule R (Form 1040).

More information. For detailed information about this 

credit, see Pub. 524, Credit for the Elderly or the Disabled.

Part IV

Rules for Survivors

of Federal Employees

This part of the publication is for survivors of federal employees. It explains how to treat amounts you receive because of the employee's death. If you are the survivor of a 

federal retiree, see Part V.

Employee earnings. Salary or wages earned by a federal employee but paid to the employee's survivor or beneficiary after the employee's death are income in respect 

of the decedent. This income is taxable to the survivor or 

beneficiary. This treatment also applies to payments for 

accrued annual leave.

Dependents of public safety officers. The Public 

Safety Officers' Benefits program, administered through 

the Bureau of Justice Assistance (BJA), provides a 

tax-free death benefit to eligible survivors of public safety 

officers whose death is the direct and proximate result of a 

traumatic injury sustained in the line of duty. The death 

20 Publication 721 (2023)
benefit isn't includible in the decedent's gross estate for 

federal estate tax purposes or the survivor's gross income 

for federal income tax purposes.

A public safety officer is a law enforcement officer, firefighter, or member of a public rescue squad or ambulance 

crew. In certain circumstances, a chaplain killed in the line 

of duty is also a public safety officer. The chaplain must 

have been responding to a fire, rescue, or police emergency as a member or employee of a fire or police department.

This program can pay survivors an emergency interim 

benefit of up to $3,000 if it finds that the death of the public safety officer is one for which a final benefit will probably be paid. If there is no final payment, the recipient of the 

interim benefit is liable for repayment. However, the BJA 

may not require all or part of the repayment if it will cause 

a hardship. If that happens, that amount is tax free.

Additional information about this program is available on the BJA website at BJA.gov.

For more information on this program, you may 

also contact the BJA by calling 1-888-744-6513.

FERS Death Benefit

You may be entitled to a special FERS death benefit if you 

were the spouse of an active FERS employee who died 

after at least 18 months of federal service. At your option, 

you can take the benefit in the form of a single payment or 

in the form of a special annuity payable over a 3-year period.

The tax treatment of the special death benefit depends 

on the option you choose and whether a FERS survivor 

annuity is also paid.

If you choose the single payment option, use the following rules.

• If a FERS survivor annuity isn't paid, at least part of 

the special death benefit is tax free. The tax-free part 

is an amount equal to the employee's FERS contributions.

• If a FERS survivor annuity is also paid, all of the special death benefit is taxable. You can't allocate any of 

the employee's FERS contributions to the special 

death benefit.

If you choose the 3-year annuity option, at least part of 

each monthly payment is tax free. Use the following rules.

• If a FERS survivor annuity isn't paid, the tax-free part 

of each monthly payment is an amount equal to the 

employee's FERS contributions divided by 36.

• If a FERS survivor annuity is also paid, allocate the 

employee's FERS contributions between the 3-year 

annuity and the survivor annuity. Make the allocation 

in the same proportion that the expected return from 

each annuity bears to the total expected return from 

both annuities. Divide the amount allocated to the 

3-year annuity by 36. The result is the tax-free part of 

each monthly payment of the 3-year annuity.

CSRS or FERS Survivor Annuity

If you receive a CSRS or FERS survivor annuity, you can 

recover the employee's cost tax free. The employee's cost 

is the total of the retirement plan contributions that were 

taken out of their pay.

How you figure the tax-free recovery of the cost depends on your annuity starting date. This is the day after 

the date of the employee's death. The methods to use are 

the same as those described near the beginning of Part II 

under Recovering your cost tax free.

The following discussions cover only the Simplified 

Method. You can use this method if your annuity starting 

date is after July 1, 1986. You must use this method if your 

annuity starting date is after November 18, 1996. Under 

the Simplified Method, each of your monthly annuity payments is made up of two parts: the tax-free part that is a 

return of the employee's cost and the taxable part that is 

the amount of each payment that is more than the part 

that represents the employee's cost. The tax-free part remains the same, even if your annuity is increased. However, see Exclusion limit, later.

Surviving spouse with no children receiving annuities. Under the Simplified Method, you figure the tax-free 

part of each full monthly annuity payment by dividing the 

employee's cost by a number of months based on your 

age. This number will differ depending on whether your 

annuity starting date is before November 19, 1996, or after 

November 18, 1996. To use the Simplified Method, complete Worksheet A. Specific instructions for Worksheet A 

are given in Part II under Simplified Method.

Example. Diane Green, age 48, began receiving a 

$1,500 monthly CSRS annuity in March 2023 upon the 

death of her husband. Her husband was a federal employee when he died. She received 10 payments in 2023. 

Her husband had contributed $36,000 to the retirement 

plan.

Diane must use the Simplified Method. Her completed 

Worksheet A is shown later. To complete line 3, she used 

Table 1 at the bottom of the worksheet and found that 360 

is the number in the last column opposite the age range 

that includes her age. Diane keeps a copy of the completed worksheet for her records. It will help her figure her 

taxable annuity in later years.

Diane's tax-free monthly amount is $100 (line 4 of her 

worksheet). If she lives to collect more than 360 payments, the payments after the 360th will be fully taxable. If 

she dies before 360 payments have been made, an “Other 

Itemized Deduction” will be allowed for the unrecovered 

cost on her final income tax return.

Surviving spouse with child. If the survivor benefits include both a life annuity for the surviving spouse and one 

or more temporary annuities for the employee's children, 

an additional step is needed under the Simplified Method 

to allocate the monthly exclusion among the beneficiaries 

correctly.

Figure the total monthly exclusion for all beneficiaries 

by completing lines 2 through 4 of Worksheet A as if only 

Publication 721 (2023) 21
Worksheet A. Simplified Method for Diane Green Keep for Your Records

See the instructions in Part II of this publication under Simplified Method.

1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, 

1040-SR, or 1040-NR, line 5a ............................................................... 1. $ 15,000

2. Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion.* See Your cost in Part II, 

Rules for Retirees, earlier ................................................................... 2. 36,000

Note. If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 

and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or 

annuity has changed). Otherwise, go to line 3.

3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the 

payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below ..... 3. 360

4. Divide line 2 by the number on line 3 .......................................................... 4. 100

5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date 

was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go 

to line 6 ................................................................................ 5. 1,000

6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of 

your worksheet for last year ................................................................. 6. 0

7. Subtract line 6 from line 2 ................................................................... 7. 36,000

8. Enter the smaller of line 5 or line 7 ........................................................... 8. 1,000

9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this 

amount to the total for Form 1040 or 1040-SR, line 5b. If you are a nonresident alien, enter this amount on line 1 

of Worksheet C. If your Form CSA 1099-R or Form CSF 1099-R shows a larger amount, use the amount figured 

on this line instead. If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums 

for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 ....... 9. $ 14,000

10. Was your annuity starting date before 1987? 

Yes.

STOP

Don't complete the rest of this worksheet.



No. Add lines 6 and 8. This is the amount you have recovered tax free through 2023. You will need this 

number if you need to fill out this worksheet next year ............................................. 10. 1,000

11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you will not have to complete this 

worksheet next year. The payments you receive next year will generally be fully taxable .................. 11. $ 35,000

Table 1 for Line 3 Above

IF your age on your

annuity starting date was . . .

AND your annuity starting date was—

before November 19, 1996, 

THEN enter on line 3 . . .

after November 18, 1996, 

THEN enter on line 3 . . .

55 or under 300 360

56–60 260 310

61–65 240 260

66–70 170 210

71 or over 120 160

Table 2 for Line 3 Above

IF the annuitants' combined 

ages on your annuity starting 

date were . . . THEN enter on line 3 . . .

110 or under 410

111–120 360

121–130 310

131–140 260

141 or over 210

* A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died 

before August 21, 1996.

22 Publication 721 (2023)
the surviving spouse received an annuity. Then, to figure 

the monthly exclusion for each beneficiary, multiply line 4 

of the worksheet by a fraction. For any beneficiary, the numerator of the fraction is that beneficiary's monthly annuity, and the denominator is the total of the monthly annuity 

payments to all the beneficiaries.

The temporary annuity is payable to the child until the 

child reaches a specified age in the plan, which can't be 

older than 25. The ending of a child's temporary annuity 

doesn't affect the total monthly exclusion figured under the 

Simplified Method. The total exclusion merely needs to be 

reallocated at that time among the remaining beneficiaries. If only the surviving spouse is left drawing an annuity, 

the surviving spouse is entitled to the entire monthly exclusion as figured in the worksheet.

Example. The facts are the same as in the example for 

Diane Green in the preceding discussion, except that the 

Greens had a son, Robert, who was age 15 at the time of 

his father's death. Robert is entitled to a $500-per-month 

temporary annuity until he reaches age 18 (age 22, if he 

remains a full-time student and doesn't marry), as specified by the plan.

In completing Worksheet A (not shown), Diane fills out 

the entries through line 4 exactly as shown in the filled-in 

worksheet for the earlier example. That is, she includes on 

line 1 only the amount of the annuity she herself received 

and she uses on line 3 the 360 factor for her age. After arriving at the $100 monthly exclusion on line 4, however, 

Diane allocates it between her own annuity and that of her 

son.

To find how much of the monthly exclusion to allocate to 

her own annuity, Diane multiplies the $100 monthly exclusion by the fraction $1,500 (her monthly annuity) over 

$2,000 (the total of her $1,500 and Robert's $500 annuities). She enters the result, $75, just below the entry 

space for line 4. She completes the worksheet by entering 

$750 on lines 5 and 8, and $14,250 on line 9.

A second Worksheet A (not shown) is completed for 

Robert's annuity. On line 1, he enters $5,000 as the total 

annuity received. Lines 2, 3, and 4 are the same as those 

on his mother's worksheet. In allocating the $100 monthly 

exclusion on line 4 to his annuity, Robert multiplies it by 

the fraction $500 over $2,000. His resulting monthly exclusion is $25. His exclusion for the year (line 8) is $250, and 

his taxable annuity for the year (line 9) is $4,750.

Diane and Robert only need to complete lines 10 and 

11 on a single worksheet to keep track of their unrecovered cost for next year. These lines are exactly as shown 

in the filled-in Worksheet A for the earlier example.

When Robert's temporary annuity ends, the computation of the total monthly exclusion will not change. The 

only difference will be that Diane will then claim the full exclusion against her annuity alone.

Surviving child only. A method similar to the Simplified 

Method can also be used to figure the taxable and nontaxable parts of a temporary annuity for a surviving child 

when there is no surviving spouse annuity. To use this 

method, divide the deceased employee's cost by the number of months from the child's annuity starting date until 

the date the child will reach age 22. The result is the 

monthly exclusion. (However, the monthly exclusion can't 

be more than the monthly annuity payment. You can carry 

over unused exclusion amounts to apply against future annuity payments.)

More than one child. If there is more than one child 

entitled to a temporary annuity (and no surviving spouse 

annuity), divide the cost by the number of months of payments until the date the youngest child will reach age 22. 

This monthly exclusion must then be allocated among the 

children in proportion to their monthly annuity payments, 

like the exclusion shown in the previous example.

Disabled child. If a child otherwise entitled to a temporary annuity was permanently disabled at the annuity 

starting date (and there is no surviving spouse annuity), 

that child is treated for tax purposes as receiving a lifetime 

annuity, like a surviving spouse. The child must complete 

line 3 of Worksheet A using a number in Table 1 at the bottom of the worksheet corresponding to the child's age at 

the annuity starting date. If more than one child is entitled 

to a temporary annuity, an allocation like the one shown 

under Surviving spouse with child, earlier, must be made 

to determine each child's share of the exclusion.

Exclusion limit. If your annuity starting date is after 

1986, the most that can be recovered tax free is the cost 

of the annuity. Once the total of your exclusions equals the 

cost, your entire annuity is taxable. If your annuity starting 

date is before 1987, the tax-free part of each whole 

monthly payment remains the same each year you receive 

payments—even if you outlive the number of months used 

on line 3 of the Simplified Method Worksheet. The total 

exclusion may be more than the cost of the annuity.

Deduction of unrecovered cost. If the annuity starting 

date is after July 1, 1986, and the annuitant's death occurs 

before all the cost is recovered tax free, the unrecovered 

cost can be claimed as an “Other Itemized Deduction” for 

the annuitant's last tax year.

Survivors of Slain Public Safety Officers

Generally, if you receive survivor annuity payments as the 

spouse, former spouse, or child of a public safety officer 

killed in the line of duty, you can exclude the payments 

from your income. The annuity is excludable to the extent 

that it is due to the officer's service as a public safety officer. Public safety officers include law enforcement officers, firefighters, chaplains, ambulance crew members, 

and rescue squad members. The provision applies to a 

chaplain killed in the line of duty after September 10, 

2001. The chaplain must have been responding to a fire, 

rescue, or police emergency as a member or employee of 

a fire or police department.

The exclusion doesn't apply if your actions were a substantial contributing factor to the death of the officer. It also 

doesn't apply if:

• The death was caused by the intentional misconduct 

of the officer or by the officer's intention to cause their 

own death,

Publication 721 (2023) 23
• The officer was voluntarily intoxicated at the time of 

death, or

• The officer was performing their duties in a grossly 

negligent manner at the time of death.

The special death benefit paid to the spouse of a 

FERS employee (see FERS Death Benefit, earlier) isn't eligible for this exclusion.

Lump-Sum CSRS or FERS Payment

If a federal employee dies before retiring and leaves no 

one eligible for a survivor annuity, the estate or other beneficiary will receive a lump-sum payment from the CSRS 

or FERS. This single payment is made up of the regular 

contributions to the retirement fund plus accrued interest, 

if any, to the extent not already paid to the employee.

The beneficiary is taxed, in the year the lump sum is 

distributed or made available, only on the amount of any 

accrued interest. The taxable amount, if any, generally 

can't be rolled over into an IRA or other plan and is subject 

to federal income tax withholding at a 10% rate. However, 

a nonspousal beneficiary making a transfer described under Rollovers by nonspouse beneficiary under Rollover 

Rules in Part II can roll over any taxable amount. In addition, the payment may qualify as a lump-sum distribution 

eligible for capital gain treatment or the 10-year tax option 

if the plan participant was born before January 2, 1936. If 

the beneficiary also receives a lump-sum payment of unrecovered voluntary contributions plus interest, this treatment applies only if the payment is received within the 

same tax year. For more information, see Lump-Sum Distributions in Pub. 575.

Lump-sum payment at end of survivor annuity. If an 

annuity is paid to the federal employee's survivor and the 

survivor annuity ends before an amount equal to the deceased employee's contributions plus any interest has 

been paid out, the rest of the contributions plus any interest will be paid in a lump sum to the employee's estate or 

other beneficiary. Generally, this beneficiary will not have 

to include any of the lump sum in gross income because, 

when it is added to the amount of the annuity previously 

received that was excludable, it will still be less than the 

employee's total contributions.

Any unrecovered cost is allowed as an “Other Itemized 

Deduction” on the final return of the annuitant.

To figure the taxable amount, if any, use Worksheet D.

CAUTION

!

Lump-Sum Payment

at End of Survivor 

Annuity

Worksheet D. 

Keep for Your Records

1. Enter the lump-sum payment ...... 1.

2. Enter the amount of annuity previously 

received tax free ................. 2.

3. Add lines 1 and 2 ................ 3.

4. Enter the employee's total cost ..... 4.

5. Taxable amount. Subtract line 4 from 

line 3. Enter the result, but not less 

than zero ....................... 5.

The taxable amount, if any, generally can't be rolled 

over into an IRA or other plan and is subject to federal income tax withholding at a 10% rate. However, a nonspousal beneficiary making a transfer described under 

Rollovers by nonspouse beneficiary under Rollover Rules 

in Part II can roll over any taxable amount. In addition, the 

payment may qualify as a lump-sum distribution eligible 

for capital gain treatment or the 10-year tax option if the 

plan participant was born before January 2, 1936. If the 

beneficiary also receives a lump-sum payment of unrecovered voluntary contributions plus interest, this treatment 

applies only if the payment is received within the same tax 

year. For more information, see Lump-Sum Distributions in 

Pub. 575.

Example. At the time of your brother's death in December 2022, he was employed by the federal government and had contributed $45,000 to the CSRS. His surviving spouse received $6,600 in survivor annuity 

payments before she died in 2023. She had used the Simplified Method for reporting her annuity and properly excluded $1,000 from gross income.

Only $6,600 of the guaranteed amount of $45,000 

(your brother's contributions) was paid as an annuity, so 

the balance of $38,400 was paid to you in a lump sum as 

your brother's sole beneficiary. You figure the taxable 

amount of this payment as follows.

Lump-Sum Payment

at End of Survivor 

Annuity—Example

Worksheet D. 

Keep for Your Records

1. Enter the lump-sum payment ...... 1. $ 38,400

2. Enter the amount of annuity previously 

received tax free ................. 2. 1,000

3. Add lines 1 and 2 ................ 3. 39,400

4. Enter the employee's total cost ..... 4. 45,000

5. Taxable amount. Subtract line 4 from 

line 3. Enter the result, but not less 

than zero ....................... 5. 0

Voluntary contributions. If a CSRS employee dies before retiring from government service, voluntary contributions to the retirement fund can't be used to provide an 

24 Publication 721 (2023)
additional annuity to the survivors. Instead, the voluntary 

contributions plus any accrued interest will be paid in a 

lump sum to the estate or other beneficiary. The beneficiary must generally include any interest received in income for the year distributed or made available. However, 

if the beneficiary is the employee's surviving spouse (or 

someone other than the employee's spouse making a 

transfer described under Rollovers by nonspouse beneficiary under Rollover Rules in Part II), the interest can be 

rolled over. See also Rollovers by surviving spouse under 

Rollover Rules in Part II.

The interest, if not rolled over, is generally subject to 

federal income tax withholding at a 20% rate (or 10% rate 

if the beneficiary isn't the employee's surviving spouse). It 

may qualify as a lump-sum distribution eligible for capital 

gain treatment or the 10-year tax option if:

• The plan participant was born before January 2, 1936;

• Regular annuity benefits can't be paid under the retirement system; and

• The beneficiary also receives a lump-sum payment of 

the regular contributions plus interest within the same 

tax year as the voluntary contributions.

For more information, see Lump-Sum Distributions in 

Pub. 575.

Thrift Savings Plan (TSP)

The payment you receive as the beneficiary of a decedent's TSP account is fully taxable except for the portion 

that is from Roth contributions and earnings if certain conditions are met. See Roth TSP balance, earlier. However, 

if you are the decedent's surviving spouse (or someone 

other than the employee's spouse making a transfer described under Rollovers by nonspouse beneficiary under 

Rollover Rules in Part II), you can generally roll over the 

payment tax free. If you don't choose a direct rollover of 

the decedent's TSP account, mandatory 20% income tax 

withholding will apply unless it is from Roth contributions. 

See Roth TSP balance, earlier. For more information, see 

Rollover Rules in Part II. If you are neither the surviving 

spouse nor someone other than the employee's spouse 

making a transfer described above, the payment isn't eligible for rollover treatment. The TSP will withhold 10% of the 

payment for federal income tax, unless you gave the TSP 

a Form W-4R to choose not to have tax withheld.

If the entire TSP account balance is paid to the beneficiaries in the same calendar year, it may qualify as a 

lump-sum distribution eligible for the 10-year tax option if 

the plan participant was born before January 2, 1936. See 

Lump-Sum Distributions in Pub. 575 for details. Also, see 

the TSP publication Tax Rules about TSP payments, available on the TSP website at TSP.gov/forms.

Beneficiary participant account. A beneficiary participant account will be established for a spouse beneficiary. 

The money in the account isn't subject to federal income 

tax until it is withdrawn. However, the portion that is from 

Roth contributions and earnings, if certain conditions are 

met, will not be subject to tax. See Roth TSP balance, earlier, for a discussion of the conditions. For more information on beneficiary participant accounts, see the TSP publication Your TSP Account: A Guide for Beneficiary 

Participants, available on the TSP website at TSP.gov/

forms.

If you receive a payment from a uniformed services TSP account that includes contributions from 

combat pay, see Uniformed services Thrift Savings Plan (TSP) accounts under Reminders near the beginning of this publication.

Federal Estate Tax

Form 706, United States Estate (and Generation-Skipping 

Transfer) Tax Return, must be filed for the estate of a citizen or resident alien of the United States who died in 2023 

if the gross estate is more than $12,920,000. Included in 

this $12,920,000 are any adjusted taxable gifts made by 

the decedent after 1976 and the specific exemption allowed for gifts by the decedent after September 8, 1976, 

and before 1977.

The gross estate generally includes the value of all 

property beneficially owned by the decedent at the time of 

death. Examples of property included in the gross estate 

are salary or annuity payments that had accrued to an employee or retiree, but which weren't paid before death, and 

the balance in the decedent's TSP account.

The gross estate also usually includes the value of the 

death and survivor benefits payable under the CSRS or 

the FERS. If the federal employee died leaving no one eligible to receive a survivor annuity, the lump sum (representing the employee's contribution to the retirement system plus any accrued interest) payable to the estate or 

other beneficiary is included in the employee's gross estate.

Marital deduction. The estate tax marital deduction is a 

deduction from the gross estate of the value of property 

that is included in the gross estate but that passes, or has 

passed, to the surviving spouse. Generally, there is no 

limit on the amount of the marital deduction. Community 

property passing to the surviving spouse qualifies for the 

marital deduction.

More information. For more information, see Pub. 559, 

Survivors, Executors, and Administrators.

Part V

Rules for Survivors

of Federal Retirees

This part of the publication is for survivors of federal retirees. It explains how to treat amounts you receive because 

of the retiree's death. If you are the survivor of a federal 

employee, see Part IV.

CAUTION

!

Publication 721 (2023) 25
Decedent's retirement benefits. Retirement benefits 

accrued and payable to a CSRS or FERS retiree before 

death, but paid to you as a survivor, are taxable in the 

same manner and to the same extent these benefits 

would have been taxable had the retiree lived to receive 

them.

CSRS or FERS Survivor Annuity

CSRS or FERS annuity payments you receive as the survivor of a federal retiree are fully or partly taxable under either the General Rule or the Simplified Method.

Cost recovered. If the retiree reported the annuity under 

the 3-Year Rule and recovered all of the cost tax free, your 

survivor annuity payments are fully taxable. This is also 

true if the retiree had an annuity starting date after 1986, 

reported the annuity under the General Rule or the Simplified Method, and had fully recovered the cost tax free.

General Rule. If the retiree was reporting the annuity under the General Rule, figure the tax-free part of the annuity 

using the same exclusion percentage that the retiree 

used. Apply the exclusion percentage to the amount 

specified as your survivor annuity at the retiree's annuity 

starting date. Don't apply the exclusion percentage to any 

cost-of-living increases made after that date. Those increases are fully taxable. For more information about the 

General Rule, see Pub. 939.

Simplified Method. If the retiree was reporting the annuity under the Simplified Method, your tax-free monthly 

amount is the same as the retiree's monthly exclusion 

(Worksheet A, line 4). This amount remains fixed even if 

the monthly payment is increased or decreased. A 

cost-of-living increase in your survivor annuity payments 

doesn't change the amount you can exclude from gross income.

Exclusion limit. If the retiree's annuity starting date was 

before 1987, you can exclude the tax-free amount from all 

the annuity payments you receive. This includes any payments received after you recover the cost tax free.

If the retiree's annuity starting date is after 1986, you 

can exclude the tax-free amount only until you recover the 

cost tax free. The annuity payments you receive after you 

recover the annuity cost tax free are fully taxable.

Deduction of unrecovered cost. If the annuity starting 

date is after July 1, 1986, and the survivor annuitant's 

death occurs before all the cost is recovered tax free, the 

unrecovered cost can be claimed as an “Other Itemized 

Deduction” for the annuitant's last tax year.

Surviving spouse with child. If the survivor benefits include both a life annuity for the surviving spouse and one 

or more temporary annuities for the retiree's children, the 

tax-free monthly amount that would otherwise apply to the 

life annuity must be allocated among the beneficiaries. To 

figure the tax-free monthly amount for each beneficiary, 

multiply it by a fraction. The numerator of the fraction is the 

beneficiary's monthly annuity, and the denominator of the 

fraction is the total of the monthly annuity payments to all 

the beneficiaries.

Example. John retired in 2021 and began receiving a 

$1,147 per month CSRS retirement annuity with a survivor 

annuity payable to his wife, Kate, upon his death. He reported his annuity using the Simplified Method. Under that 

method, $150 of each payment he received was a tax-free 

recovery of his $45,000 cost. John received a total of 22 

monthly payments and recovered $3,300 of his cost tax 

free before his death in 2023. At John's death, Kate began 

receiving an annuity of $840 per month and their children, 

Sam and Lou, began receiving temporary annuities of 

$330 each per month. Kate must allocate the $150 

tax-free monthly amount among the three annuities.

To find how much of the monthly exclusion to allocate to 

her own annuity, Kate multiplies the $150 tax-free monthly 

amount by the fraction $840 (her monthly annuity) over 

$1,500 (the total of her $840, Sam's $330, and Lou's $330 

monthly annuities). Her resulting monthly exclusion is $84. 

In allocating the $150 monthly exclusion to each child's 

annuity, the $150 is multiplied by the fraction $330 (each 

child's monthly annuity) over $1,500. Each child's resulting 

monthly exclusion is $33.

Beginning with the month in which either child is no longer eligible for an annuity, as specified in the plan, Kate 

will reallocate the $150 monthly exclusion to her own annuity by multiplying the $150 by the fraction $840 over 

$1,170 (the total of her $840 and her other child's $330 

monthly annuities). Her resulting monthly exclusion is 

$108. In reallocating the $150 monthly exclusion to the 

other child's annuity, the $150 is multiplied by the fraction 

$330 over $1,170. The other child's resulting monthly exclusion is $42.

Surviving child only. If the survivor benefits include only 

a temporary annuity for the retiree's child, allocate the unrecovered cost over the number of months from the date 

the annuity started until the child reaches age 22. If more 

than one temporary annuity is paid, allocate the cost over 

the number of months until the youngest child reaches 

age 22, and allocate the tax-free monthly amount among 

the annuities in proportion to the monthly annuity payments.

Lump-Sum CSRS or FERS Payment

If a deceased retiree has no beneficiary eligible to receive 

a survivor annuity, and the deceased retiree's annuity 

ends before an amount equal to the deceased retiree's 

contributions plus any interest has been paid out, the rest 

of the contributions plus any interest will be paid in a lump 

sum to the estate or other beneficiary. The estate or other 

beneficiary will rarely have to include any part of the lump 

sum in gross income. The taxable amount is figured by using Worksheet E.

26 Publication 721 (2023)
Lump-Sum Payment at 

End of Retiree's 

Annuity (With No 

Survivor Annuity)

Worksheet E. 

Keep for Your Records

1. Enter the lump-sum payment ...... 1.

2. Enter the amount of annuity received 

tax free by the retiree ............. 2.

3. Add lines 1 and 2 ................ 3.

4. Enter the total cost ............... 4.

5. Taxable amount. Subtract line 4 from 

line 3. Enter the result, but not less 

than zero ....................... 5.

The taxable amount, if any, generally can't be rolled 

over into an IRA or other plan and is subject to federal income tax withholding at a 10% rate. However, a nonspousal beneficiary making a transfer described under 

Rollovers by nonspouse beneficiary under Rollover Rules 

in Part II can roll over any taxable amount. In addition, the 

payment may qualify as a lump-sum distribution eligible 

for capital gain treatment or the 10-year tax option if the 

plan participant was born before January 2, 1936. If the 

beneficiary also receives a lump-sum payment of unrecovered voluntary contributions plus interest, this treatment 

applies only if the payment is received within the same tax 

year. For more information, see Lump-Sum Distributions in 

Pub. 575.

Voluntary Contributions

If you receive an additional survivor annuity benefit from 

voluntary contributions to the CSRS, treat it separately 

from the annuity that comes from regular contributions. 

Each year, you will receive a Form CSF 1099-R that will 

show how much of your total annuity received in the past 

year was from each type of benefit.

Figure the taxable and tax-free parts of your additional 

survivor annuity benefit from voluntary contributions using 

the same rules that apply to regular CSRS and FERS survivor annuities, as explained earlier under CSRS or FERS 

Survivor Annuity.

Lump-sum payment. Figure the taxable amount, if any, 

of a lump-sum payment of the retiree's unrecovered voluntary contributions plus any interest using the rules that apply to regular lump-sum CSRS or FERS payments, as explained earlier under Lump-Sum CSRS or FERS Payment.

Thrift Savings Plan (TSP)

If you receive a payment from the TSP account of a deceased federal retiree, the payment is fully taxable except 

for the portion that is from Roth contributions and earnings 

if certain conditions are met. See Roth TSP balance, earlier. However, if you are the retiree's surviving spouse (or 

someone other than the retiree's spouse making a transfer 

described under Rollovers by nonspouse beneficiary 

under Rollover Rules in Part II), you can generally roll over 

the otherwise taxable payment tax free. If you don't 

choose a direct rollover of the TSP account, mandatory 

20% federal income tax withholding will apply unless it is 

from Roth contributions. See Roth TSP balance, earlier. 

For more information, see Rollover Rules in Part II. If you 

are neither the surviving spouse nor someone other than 

the retiree's spouse making a transfer described above, 

the payment isn't eligible for rollover treatment. The TSP 

will withhold 10% of the payment for federal income tax, 

unless you gave the TSP a Form W-4R to choose not to 

have tax withheld.

If the retiree chose to receive their account balance as 

an annuity, the payments you receive as the retiree's survivor are fully taxable when you receive them, whether they 

are received as annuity payments or as a cash refund of 

the remaining value of the amount used to purchase the 

annuity. However, the portion that is from Roth contributions and earnings, if certain conditions are met, will not 

be subject to tax. See Roth TSP balance, earlier.

Beneficiary participant account. A beneficiary participant account will be established for a spouse beneficiary. 

The money in the account isn't subject to federal income 

tax until it is withdrawn. The portion withdrawn that is from 

Roth contributions and earnings, if certain conditions are 

met, will not be subject to tax. See Roth TSP balance, earlier, for a discussion of the conditions. For more information on beneficiary participant accounts, see the TSP publication Your TSP Account: A guide for Beneficiary 

Participants, available on the TSP website at TSP.gov/

forms.

If you receive a payment from a uniformed services TSP account that includes contributions from 

combat pay, see Uniformed services Thrift Savings Plan (TSP) accounts under Reminders near the beginning of this publication.

Federal Estate Tax

A federal estate tax return may have to be filed for the estate of the retired employee. See Federal Estate Tax in 

Part IV.

Income Tax Deduction for Estate Tax 

Paid

Any income that a decedent had a right to receive and 

could have received had death not occurred and that 

wasn't properly includible in the decedent's final income 

tax return is treated as income in respect of a decedent. 

This includes retirement benefits accrued and payable to 

a retiree before death, but paid to you as a survivor.

If the federal estate tax was paid on the decedent's estate and you are required to include income in respect of a 

decedent in your gross income for any tax year, you can 

deduct the portion of the federal estate tax that is from the 

inclusion in the estate of the right to receive that amount. 

For this purpose, if the decedent died after the annuity 

starting date, the taxable portion of a survivor annuity you 

CAUTION

!

Publication 721 (2023) 27
receive (other than a temporary annuity for a child) is considered income in respect of a decedent.For more information, see Income in Respect of a Decedent in Pub. 559.

28 Publication 721 (2023)
Worksheets A and B

This section contains blank Worksheets A and B for you to 

use for your own calculations.

Worksheet A. Simplified Method Keep for Your Records

See the instructions in Part II of this publication under Simplified Method.

1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, 

1040-SR, or 1040-NR, line 5a ................................................................. 1.

2. Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion.* See Your cost in Part II, Rules 

for Retirees, earlier ........................................................................ 2.

Note. If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and 

enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has 

changed). Otherwise, go to line 3.

3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the payments are 

for your life and that of your beneficiary, enter the appropriate number from Table 2 below ..................... 3.

4. Divide line 2 by the number on line 3 ............................................................ 4.

5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date was 

before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go to line 6 ............ 5.

6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of your 

worksheet for last year ...................................................................... 6.

7. Subtract line 6 from line 2 .................................................................... 7.

8. Enter the smaller of line 5 or line 7 ............................................................. 8.

9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this amount to 

the total for Form 1040 or 1040-SR, line 5b. If you are a nonresident alien, enter this amount on line 1 of Worksheet C. If 

your Form CSA 1099-R or Form CSF 1099-R shows a larger amount, use the amount figured on this line instead. If you 

are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II 

before entering an amount on your tax return or Worksheet C, line 1 ..................................... 9.

10. Was your annuity starting date before 1987? 

Yes.

STOP

Don't complete the rest of this worksheet.

No. Add lines 6 and 8. This is the amount you have recovered tax free through 2023. You will need this number if 

you need to fill out this worksheet next year ....................................................... 10.

11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you will not have to complete this worksheet 

next year. The payments you receive next year will generally be fully taxable ............................... 11.

Table 1 for Line 3 Above

IF your age on your annuity

starting date was . . .

AND your annuity starting date was—

before November 19, 1996, 

THEN enter on line 3 . . .

after November 18, 1996, 

THEN enter on line 3 . . .

55 or under 300 360

56–60 260 310

61–65 240 260

66–70 170 210

71 or over 120 160

Table 2 for Line 3 Above

IF the annuitants' combined ages 

on your annuity starting date 

were . . . THEN enter on line 3 . . .

110 or under 410

111–120 360

121–130 310

131–140 260

141 or over 210

* A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died before August 21, 1996.

Publication 721 (2023) 29
How To Get Tax Help

If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, 

forms, or instructions, go to IRS.gov to find resources that 

can help you right away.

Preparing and filing your tax return. After receiving all 

your wage and earnings statements (Forms W-2, W-2G, 

1099-R, 1099-MISC, 1099-NEC, etc.); unemployment 

compensation statements (by mail or in a digital format) or 

other government payment statements (Form 1099-G); 

and interest, dividend, and retirement statements from 

banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you 

qualify for free tax preparation, or hire a tax professional to 

prepare your return.

Free options for tax preparation. Your options for preparing and filing your return online or in your local community, if you qualify, include the following.

• Free File. This program lets you prepare and file your 

federal individual income tax return for free using software or Free File Fillable Forms. However, state tax 

preparation may not be available through Free File. Go 

to IRS.gov/FreeFile to see if you qualify for free online 

federal tax preparation, e-filing, and direct deposit or 

payment options.

• VITA. The Volunteer Income Tax Assistance (VITA) 

program offers free tax help to people with 

low-to-moderate incomes, persons with disabilities, 

and limited-English-speaking taxpayers who need 

help preparing their own tax returns. Go to IRS.gov/

VITA, download the free IRS2Go app, or call 

800-906-9887 for information on free tax return preparation.

• TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly 

those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. 

Go to IRS.gov/TCE or download the free IRS2Go app 

for information on free tax return preparation.

• MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military 

OneSource. For more information, go to 

MilitaryOneSource (MilitaryOneSource.mil/MilTax).

Also, the IRS offers Free Fillable Forms, which can 

be completed online and then e-filed regardless of income.

Using online tools to help prepare your return. Go to 

IRS.gov/Tools for the following.

• The Earned Income Tax Credit Assistant (IRS.gov/

EITCAssistant) determines if you’re eligible for the 

earned income credit (EIC).

• The Online EIN Application (IRS.gov/EIN) helps you 

get an employer identification number (EIN) at no 

cost.

• The Tax Withholding Estimator (IRS.gov/W4App) 

makes it easier for you to estimate the federal income 

tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.

• The First-Time Homebuyer Credit Account Look-up 

(IRS.gov/HomeBuyer) tool provides information on 

your repayments and account balance.

• The Sales Tax Deduction Calculator (IRS.gov/

SalesTax) figures the amount you can claim if you 

itemize deductions on Schedule A (Form 1040).

Getting answers to your tax questions. On 

IRS.gov, you can get up-to-date information on 

current events and changes in tax law.

• IRS.gov/Help: A variety of tools to help you get answers to some of the most common tax questions.

• IRS.gov/ITA: The Interactive Tax Assistant, a tool that 

will ask you questions and, based on your input, provide answers on a number of tax topics.

• IRS.gov/Forms: Find forms, instructions, and publications. You will find details on the most recent tax 

changes and interactive links to help you find answers 

to your questions.

Lump-Sum Payment 

See the instructions in Part II of this publication 

under Alternative Annuity Option.

Worksheet B. 

Keep for Your Records

1. Enter your lump-sum credit (your cost in the plan at the annuity starting date) ..................... 1.

2. Enter the present value of your annuity contract ........................................... 2.

3. Divide line 1 by line 2 .............................................................. 3.

4. Tax-free amount. Multiply line 1 by line 3. (Caution: Don't include this amount on line 6 of Worksheet A in 

this publication.) ................................................................. 4.

5. Taxable amount (net cost in the plan). Subtract line 4 from line 1. Include this amount in the total on 

Form 1040, 1040-SR, or 1040-NR, line 5b. Also, enter this amount on line 2 of Worksheet A in this 

publication ..................................................................... 5.

30 Publication 721 (2023)
• You may also be able to access tax information in your 

e-filing software.

Need someone to prepare your tax return? There are 

various types of tax return preparers, including enrolled 

agents, certified public accountants (CPAs), accountants, 

and many others who don’t have professional credentials. 

If you choose to have someone prepare your tax return, 

choose that preparer wisely. A paid tax preparer is:

• Primarily responsible for the overall substantive accuracy of your return,

• Required to sign the return, and

• Required to include their preparer tax identification 

number (PTIN).

Although the tax preparer always signs the return, 

you're ultimately responsible for providing all the 

information required for the preparer to accurately 

prepare your return and for the accuracy of every item reported on the return. Anyone paid to prepare tax returns 

for others should have a thorough understanding of tax 

matters. For more information on how to choose a tax preparer, go to Tips for Choosing a Tax Preparer on IRS.gov.

Employers can register to use Business Services Online. The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure 

W-2 filing options to CPAs, accountants, enrolled agents, 

and individuals who process Form W-2, Wage and Tax 

Statement, and Form W-2c, Corrected Wage and Tax 

Statement.

IRS social media. Go to IRS.gov/SocialMedia to see the 

various social media tools the IRS uses to share the latest 

information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our 

highest priority. We use these tools to share public information with you. Don’t post your social security number 

(SSN) or other confidential information on social media 

sites. Always protect your identity when using any social 

networking site.

The following IRS YouTube channels provide short, informative videos on various tax-related topics in English, 

Spanish, and ASL.

• Youtube.com/irsvideos.

• Youtube.com/irsvideosmultilingua.

• Youtube.com/irsvideosASL.

Watching IRS videos. The IRS Video portal 

(IRSVideos.gov) contains video and audio presentations 

for individuals, small businesses, and tax professionals.

Online tax information in other languages. You can 

find information on IRS.gov/MyLanguage if English isn’t 

your native language.

Free Over-the-Phone Interpreter (OPI) Service. The 

IRS is committed to serving taxpayers with limited-English 

proficiency (LEP) by offering OPI services. The OPI ServCAUTION

!

ice is a federally funded program and is available at Taxpayer Assistance Centers (TACs), most IRS offices, and 

every VITA/TCE tax return site. The OPI Service is accessible in more than 350 languages.

Accessibility Helpline available for taxpayers with 

disabilities. Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and 

future accessibility products and services available in alternative media formats (for example, braille, large print, 

audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or 

account-related issues, go to IRS.gov/LetUsHelp.

Note. Form 9000, Alternative Media Preference, or 

Form 9000(SP) allows you to elect to receive certain types 

of written correspondence in the following formats.

• Standard Print.

• Large Print.

• Braille.

• Audio (MP3).

• Plain Text File (TXT).

• Braille Ready File (BRF).

Disasters. Go to IRS.gov/DisasterRelief to review the 

available disaster tax relief.

Getting tax forms and publications. Go to IRS.gov/

Forms to view, download, or print all the forms, instructions, and publications you may need. Or, you can go to 

IRS.gov/OrderForms to place an order.

Getting tax publications and instructions in eBook 

format. Download and view most tax publications and instructions (including the Instructions for Form 1040) on 

mobile devices as eBooks at IRS.gov/eBooks.

IRS eBooks have been tested using Apple's iBooks for 

iPad. Our eBooks haven’t been tested on other dedicated 

eBook readers, and eBook functionality may not operate 

as intended.

Access your online account (individual taxpayers 

only). Go to IRS.gov/Account to securely access information about your federal tax account.

• View the amount you owe and a breakdown by tax 

year.

• See payment plan details or apply for a new payment 

plan.

• Make a payment or view 5 years of payment history 

and any pending or scheduled payments.

• Access your tax records, including key data from your 

most recent tax return, and transcripts.

• View digital copies of select notices from the IRS.

• Approve or reject authorization requests from tax professionals.

Publication 721 (2023) 31
• View your address on file or manage your communication preferences.

Get a transcript of your return. With an online account, 

you can access a variety of information to help you during 

the filing season. You can get a transcript, review your 

most recently filed tax return, and get your adjusted gross 

income. Create or access your online account at IRS.gov/

Account.

Tax Pro Account. This tool lets your tax professional 

submit an authorization request to access your individual 

taxpayer IRS online account. For more information, go to 

IRS.gov/TaxProAccount.

Using direct deposit. The safest and easiest way to receive a tax refund is to e-file and choose direct deposit, 

which securely and electronically transfers your refund directly into your financial account. Direct deposit also 

avoids the possibility that your check could be lost, stolen, 

destroyed, or returned undeliverable to the IRS. Eight in 

10 taxpayers use direct deposit to receive their refunds. If 

you don’t have a bank account, go to IRS.gov/

DirectDeposit for more information on where to find a bank 

or credit union that can open an account online.

Reporting and resolving your tax-related identity 

theft issues. 

• Tax-related identity theft happens when someone 

steals your personal information to commit tax fraud. 

Your taxes can be affected if your SSN is used to file a 

fraudulent return or to claim a refund or credit.

• The IRS doesn’t initiate contact with taxpayers by 

email, text messages (including shortened links), telephone calls, or social media channels to request or 

verify personal or financial information. This includes 

requests for personal identification numbers (PINs), 

passwords, or similar information for credit cards, 

banks, or other financial accounts.

• Go to IRS.gov/IdentityTheft, the IRS Identity Theft 

Central webpage, for information on identity theft and 

data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or 

stolen or you suspect you’re a victim of tax-related 

identity theft, you can learn what steps you should 

take.

• Get an Identity Protection PIN (IP PIN). IP PINs are 

six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your 

SSN. To learn more, go to IRS.gov/IPPIN.

Ways to check on the status of your refund. 

• Go to IRS.gov/Refunds.

• Download the official IRS2Go app to your mobile device to check your refund status.

• Call the automated refund hotline at 800-829-1954.

The IRS can’t issue refunds before mid-February 

for returns that claimed the EIC or the additional 

child tax credit (ACTC). This applies to the entire 

refund, not just the portion associated with these credits.

Making a tax payment. Payments of U.S. tax must be 

remitted to the IRS in U.S. dollars. Digital assets are not 

accepted. Go to IRS.gov/Payments for information on how 

to make a payment using any of the following options.

• IRS Direct Pay: Pay your individual tax bill or estimated 

tax payment directly from your checking or savings account at no cost to you.

• Debit Card, Credit Card, or Digital Wallet: Choose an 

approved payment processor to pay online or by 

phone.

• Electronic Funds Withdrawal: Schedule a payment 

when filing your federal taxes using tax return preparation software or through a tax professional.

• Electronic Federal Tax Payment System: Best option 

for businesses. Enrollment is required.

• Check or Money Order: Mail your payment to the address listed on the notice or instructions.

• Cash: You may be able to pay your taxes with cash at 

a participating retail store.

• Same-Day Wire: You may be able to do same-day 

wire from your financial institution. Contact your financial institution for availability, cost, and time frames.

Note. The IRS uses the latest encryption technology to 

ensure that the electronic payments you make online, by 

phone, or from a mobile device using the IRS2Go app are 

safe and secure. Paying electronically is quick, easy, and 

faster than mailing in a check or money order.

What if I can’t pay now? Go to IRS.gov/Payments for 

more information about your options.

• Apply for an online payment agreement (IRS.gov/

OPA) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once 

you complete the online process, you will receive immediate notification of whether your agreement has 

been approved.

• Use the Offer in Compromise Pre-Qualifier to see if 

you can settle your tax debt for less than the full 

amount you owe. For more information on the Offer in 

Compromise program, go to IRS.gov/OIC.

Filing an amended return. Go to IRS.gov/Form1040X 

for information and updates.

Checking the status of your amended return. Go to 

IRS.gov/WMAR to track the status of Form 1040-X amended returns.

It can take up to 3 weeks from the date you filed 

your amended return for it to show up in our system, and processing it can take up to 16 weeks.

CAUTION

!

CAUTION

!

32 Publication 721 (2023)
Understanding an IRS notice or letter you’ve received. Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.

Responding to an IRS notice or letter. You can now 

upload responses to all notices and letters using the 

Document Upload Tool. For notices that require additional 

action, taxpayers will be redirected appropriately on 

IRS.gov to take further action. To learn more about the 

tool, go to IRS.gov/Upload.

Note. You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may 

not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that began providing 

translations in 2023. You will continue to receive communications, including notices and letters, in English until they 

are translated to your preferred language.

Contacting your local TAC. Keep in mind, many questions can be answered on IRS.gov without visiting a TAC. 

Go to IRS.gov/LetUsHelp for the topics people ask about 

most. If you still need help, TACs provide tax help when a 

tax issue can’t be handled online or by phone. All TACs 

now provide service by appointment, so you’ll know in advance that you can get the service you need without long 

wait times. Before you visit, go to IRS.gov/TACLocator to 

find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, 

under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”

The Taxpayer Advocate Service (TAS) 

Is Here To Help You

What Is TAS?

TAS is an independent organization within the IRS that 

helps taxpayers and protects taxpayer rights. TAS strives 

to ensure that every taxpayer is treated fairly and that you 

know and understand your rights under the Taxpayer Bill 

of Rights.

How Can You Learn About Your Taxpayer 

Rights?

The Taxpayer Bill of Rights describes 10 basic rights that 

all taxpayers have when dealing with the IRS. Go to 

TaxpayerAdvocate.IRS.gov to help you understand what 

these rights mean to you and how they apply. These are 

your rights. Know them. Use them.

What Can TAS Do for You?

TAS can help you resolve problems that you can’t resolve 

with the IRS. And their service is free. If you qualify for 

their assistance, you will be assigned to one advocate 

who will work with you throughout the process and will do 

everything possible to resolve your issue. TAS can help 

you if:

• Your problem is causing financial difficulty for you, 

your family, or your business;

• You face (or your business is facing) an immediate 

threat of adverse action; or

• You’ve tried repeatedly to contact the IRS but no one 

has responded, or the IRS hasn’t responded by the 

date promised.

How Can You Reach TAS?

TAS has offices in every state, the District of Columbia, 

and Puerto Rico. To find your advocate’s number:

• Go to TaxpayerAdvocate.IRS.gov/Contact-Us;

• Download Pub. 1546, The Taxpayer Advocate Service 

Is Your Voice at the IRS, available at IRS.gov/pub/irspdf/p1546.pdf;

• Call the IRS toll free at 800-TAX-FORM 

(800-829-3676) to order a copy of Pub. 1546;

• Check your local directory; or

• Call TAS toll free at 877-777-4778.

How Else Does TAS Help Taxpayers?

TAS works to resolve large-scale problems that affect 

many taxpayers. If you know of one of these broad issues, 

report it to TAS at IRS.gov/SAMS. Be sure to not include 

any personal taxpayer information.

Low Income Taxpayer Clinics (LITCs)

LITCs are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level 

and who need to resolve tax problems with the IRS. LITCs 

can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, 

LITCs can provide information about taxpayer rights and 

responsibilities in different languages for individuals who 

speak English as a second language. Services are offered 

for free or a small fee. For more information or to find an 

LITC near you, go to the LITC page at 

TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134, 

Low Income Taxpayer Clinic List, at IRS.gov/pub/irs-pdf/

p4134.pdf.

Publication 721 (2023) 33
To help us develop a more useful index, please let us know if you have ideas for index entries.

Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

A

Alternative annuity option:

Lump-sum payment 7

Annual leave 10

Annuity:

Starting date 5

Statement 5

With survivor benefit 21

Without survivor benefit 6

Assistance (See Tax help)

B

Benefits, how to report 18

C

Child's temporary annuity 21

Community property laws 12

Contributions, refund of 3

Cost (contributions to retirement 

plan) 5

Credit for the elderly or the 

disabled 20

D

Death benefit 21

Deduction for estate tax 27

Disability retirement 19

Disabled child 23

Distributions:

Qualified domestic relations order 

(QDRO) 16

Withholding from TSP payments 4

E

Estate tax 25, 27

Estimated tax 3, 4

F

Federal Employees' Compensation 

Act (FECA) 19

Filing requirements 5

Form:

1099-R 4

CSA 1099-R 4

CSF 1099-R 5

W-4P 4

W-4R 4

G

General Rule 7, 26

Gift tax 10

I

Income in respect of a decedent 27

Income tax withholding 3, 19

L

Lump-sum CSRS or FERS 

payment 24, 26

Lump-sum payment:

Alternative annuity option 7

Installments 9

Withholding 4

M

Mandatory retirement age 20

Marital deduction 25

Minimum retirement age 19

N

Nonresident alien retiree 12

P

Permanently and totally 

disabled 20

Physician's statement 20

Public safety officers:

Dependents 20

Insurance premiums 18

Survivors 23

Publications (See Tax help)

Q

Qualified domestic relations order 

(QDRO) 16

R

Reemployment after retirement 12

Refund of contributions 3

Retirees, rules for 5

Retirement during the past year 10

Rollovers:

Nonspouse beneficiary 17

Rollover rules 14

SIMPLE retirement accounts 15

To Roth IRAs 17

Roth Thrift Savings Plan 13

S

SIMPLE retirement accounts 15

Simplified Method 6, 26

Substantial gainful activity 20

Survivor annuity 6, 21, 26

Survivors of federal employees 20

Survivors of federal retirees 25

T

Tax help 30

Thrift Savings Plan 2, 13

Roth option 13

U

Uniformed services Thrift Savings 

Plan 2

Unused annual leave 20

V

Voluntary contributions 10, 24, 27

W

Withholding certificate 4

Withholding of income tax 3, 19

Worksheets:

Lump-sum payment at end of 

survivor annuity 24

Lump-sum payment to the estate or 

other beneficiary 26

Lump-sum payment under 

alternative annuity option 30

Nonresident alien retiree 12

Simplified Method 29

34 Publication 721 (2023)