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Discussion:Employee Purchase of Retirement Service

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Discussion Forum Index --> Tax Questions --> Employee Purchase of Retirement Service


RSRAGENCY (talk|edits) said:

3 March 2008
I've looked and looked and I don't see anywhere that this is allowed as a 'deduction' on income tax. Client insists he was told he could deduct it on his income tax.....This is a first for me. I know the regulations regarding the actual purchase, but I didn't think it would act as a deduction.....Anyone have experience with this?

DJ

Trillium (talk|edits) said:

3 March 2008
This is for purchase/buyback of retirement service credits, right? Increasing his # yrs worked for purposes of calculating his retirement benefit?

I'm wondering if he's gotten confused about pre-tax vs after-tax purchase of the credits. If his employer allowed pre-tax purchases of service credits, then that would have reduced his W-2 taxable income if that's what he did... (which he might have misremembered as a deduction). Or, is he thinking about how part of his actual pension/retirement benefits might not be taxable if he paid for the credits with after-tax money?

RSRAGENCY (talk|edits) said:

3 March 2008
Yes, it was the military service that allowed this addition to his retirement. You may be right with the thought regarding pre-tax purchase during employment. I have the documentation showing his payments, by personal check, to the employees' retirement system. So, I'm sure he's gotten confused.

Thanks, so much!

And YES.... you will find all sorts of info by just reading these threads! I've been coming in here for a couple of years now, and it is a wonderful place to be! The people who are here are the nicest bunch you'd ever want to have on your side!! ALWAYS HELPFUL!!

Thanks, again!

DJ

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