[kaycee3390]

I worked as a NYC teacher in the 1970s. Although I was never vested, I left my pension plan money --which consisted of a QPP(qualified pension plan) and TDA(teacher deferred annuity--this was not an elective component, but mandatory part of plan) in the system when I left in 1977, until 2005. At that time I took it out to roll it over into the State of NJ's Public Employee Retirement System to purchase prior service credit. NYC would not make a transfer into the NJ PERS system, so I had execute an indirect rollover by first receiving the distribution, and then sending the this amount plus any tax money taken out to NJ PERS. This completed the purchase and satisfied IRS rules.

At the end of the 2005 tax year, NYC sent me a 1099-R for the TDA and one for the QPP. On the 1099-R for the QPP, in Box 5 there was an amount of $1429 labeled employee contributions which was treated as a nontaxable component of the total distribution. When I filed my 1040 for 2005, I treated the taxable portions of the distribution as a rollover to qualify them as deferred and sent the IRS a detailed explanation with copies of checks, etc. Since the $1429 in box 5 was a nontaxable item, I didn't include it as part of the rollover figure listed on line 16a on the 1040. I did include it on Form 8880, line 4. Consequently, it reduced my retirement savings credit.

After reading answers on your forum, I am now thinking this $1429 should never have been placed on Form 8880, line 4 to reduce the credit because it was never a voluntary contribution in the first place, and it was part of the indirect rollover to the NJ pension system. Now in 2006, my tax software program is again including this figure as a deduction in the amount of the credit because it imported the info from last year. Does this $1429 belong on the Form 8880? Will the IRS question it because I listed in 2005?

[AtlantaTaxExpert]

This is a somewhat complex question that I cannot answer without researching it (something I do NOT have time to do at this point in time.

I tend to agree with your interpretation of regarding the treatment of the $1,429. However, I cannot be sure that interpretation is correct without the research noted above.

Sorry!