New client, age 63 has been receiving a disability pension since the 1980s. He was a police officier who suffered post tramatic stress syndrome. For 2009, the 1099R shows about $ 18000 gross distrib and $ 18000 taxable. He says that only half is taxable and the other half is considered workman's comp. He sends a letter to the IRS each year. His wife dropped off the letter (dated in 2005) and a 6 page legal decision dated in 1986 which I am supposed to send in to the IRS. I've never encountered this situation before. Does workmen's comp continue forever - even after you are well past retirement age? Thanks for any help.

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NYPD officers retire on 3/4 disability pension receive 1099R's with taxable amounts $0. Their disability pensions are considered to be tax-free worksman's comp for the rest of their lives. Don't know if it applies to any other group of retirees.

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>>a 6 page legal decision dated in 1986<<

Who made that decision, and what does it say?

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Had a client that thru a collective bargaining agreement all of his pension benefit was tax exempt through a letter sent with the tax return. One year I didn't send a copy of the letter and of course IRS came back showing his 1099-r fully taxable. Sent copy of letter and end of story. The exemption was for disability.

Pretty sure it was a PLR, 1099-R always showed as taxable, letter always corrected.

This is all from memory. Not at my office to look up file.

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Had a client who was a union member. Took early retirement because of disability. He received 1099R for his pension.

The disability payment was a separate monthly payment. Never received any gov't forms for it because it was not taxable or reportable. He received it until his death many years after retiring.

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