Taxes on annuities


Q: I was told by an administrative person some 15 years ago that your initial retirement pay is not taxed until your retirement exceeds your cumulative retirement pay-in. Is this true?

A: That hasn’t been true since the law changed in 1983. Before that time, retirees received the full amount of their retirement contributions before their annuities were taxed. Since then, a portion of each annuity payment is taxable. For information on how that amount is determined, read IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits, available at


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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