If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew who is retired because of
disability or because you reached normal retirement age),
you can elect to exclude from income distributions made
from your eligible retirement plan that are used to pay the
premiums for coverage by an accident or health plan or a
long-term care insurance contract. The premiums can be
for coverage for you, your spouse, or dependents.
The distribution must be from the plan maintained by
the employer from which you retired as a public safety officer. The distribution can be made directly from the plan to
the provider of the accident or health plan or long-term
care insurance contract, or the distribution can be made to
you to pay to the provider of the accident or health plan or
long-term care insurance contract.
You can exclude from income the smaller of the amount
of the insurance premiums or $3,000. You can make this
election only for amounts that would otherwise be included in your income. The amount excluded from your income can’t be used to claim a medical expense deduction.
An eligible retirement plan is a governmental plan that
is a:
If you make this election, reduce the otherwise taxable
amount of your pension or annuity by the amount excluded. The amount shown in box 2a of Form 1099-R doesn’t
reflect this exclusion. Report your total distributions on
Form 1040, 1040-SR, or 1040-NR, line 5a. Report the taxable amount on Form 1040, 1040-SR, or 1040-NR,
line 5b. Also, check box 2 for “PSO” on line 5c.
If you are retired on disability and reporting your disability pension on Form 1040, 1040-SR, or 1040-NR, line 1h,
include only the taxable amount on that line and enter
“PSO” and the amount excluded on the dotted line next to
the applicable line.
