Is survivor annuity taxable?

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Q. Are survivor annuities paid to surviving spouse taxable? Distribution code on 1099-R is 4-Death Benefit and no federal income taxes were withheld.

A. Yes, they are. However, if there are any unexpended retirement contributions in the late spouse’s account, a portion of the annuity would be tax-free. For more information, go to https://www.irs.gov/publications/p721/index.html.

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About Author

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

10 Comments

  1. I read an article on line stating that suvivor annuities were not taxable. I am an 85 year old widow also receiving a pension and a small social security check. In my situation are suvivor annuities taxable.

  2. Caroll Peacock on

    It is clear to me that my mother’s social security is not taxable but I am not sure about her death benefit survivor annuity. Does it have to exceed a certain amount to be taxed? No taxes are withheld. Does that mean it isn’t taxable?

    • Both her Social Security benefit and her survivor annuity are taxable. However, the amount of that tax will vary from individual to individual. To find out how your mother’s benefits will be taxed, go to http://www.irs.com and read Publication 721.

  3. Why would they not give you an option to have taxes withheld if a survivor annuity it taxable??? What a huge shock that I owe $6000.00!

    • Sorry for not getting back to you sooner. I was out of the country when you email arrived and I just got home yesterday, In answer to your question, here’s what OPM had to say: “Once the survivor benefit has been finalized, the “Your Federal Survivor Benefits” booklet is sent to the survivor, and it includes information about Federal taxes and how they can be withheld.” Didn’t you get a copy of that publication?

  4. Rebecca Alexander on

    Is a survivor annuitant permitted to “write-off” a portion of the total employee contributions of the federal retiree’s contribution? I know federal retiree’s have the total employee contributions filled in on block 9b. of the 1099-R. Just curious if the same type write-off is applicable for survivor annuitants?

    • According to OPM, “If a survivor annuity has been selected [and the retiree] dies prior to recovering the entire annuity cost the nonrecovered annuity cost is allowed as a miscellaneous itemized deduction not subject to the 2 percent of adjusted gross income limitation. The deduction would be included on the deceased taxpayer’s final income tax return (Schedule A, itemized deductions).” However, if the retiree had been receiving an annuity for 18 months or more since retiring, there wouldn’t be anything left for a survivor to claim. Under current law, an annuitant first receives the money he or she contributed to the retirement system; after that the annuity consists solely of the government’s money. This is true despite the fact that the law governing taxation causes the amount that can be excluded from taxation to be based on the retiree’s life expectancy on the day he or she retired.

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