Part V Rules for Survivors of Federal Retirees . . . <u>26</u>

Worksheets A and B . . . . . . . . . . . . . . . . . . . . . . . 29

How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . . 30

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

For the latest information about developments related to Pub. 721, such as legislation enacted after it was published, go to IRS.gov/Pub721 .

Additional deductions for seniors. Beginning in 2025, seniors age 65 or older may claim an additional deduction of $6,000 (or $12,000 for married couples where both spouses qualify).

• The deduction is an addition to the standard or itemized deduction.

• It phases out for taxpayers with modified adjusted gross income (MAGI) over $75,000 (single) or $150,000 (married filing jointly).

Repeal of the windfall elimination provision (WEP) and government pension offset (GPO). Recent legislation repealed the WEP and GPO with respect to social security benefits payable after 2023. For more information, see Social Security Fairness Act: Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) update | SSA .

Phased retirement. The phased retirement program was signed into law by the Moving Ahead for Progress in the 21st Century Act. This program allows eligible employees to begin receiving annuity payments while working part time. For more information about phased retirement, go to

Publication 721 (2025) Catalog Number 46713C Feb 11, 2026 Department of the Treasury Internal Revenue Service www.irs.gov

OPM Retirement Center – Phased Retirement . For information on how the tax-free portion (recovery of investment in the contract) of your phased retirement benefits is figured, see Notice 2016-39, available at IRS.gov/irb/ 2016-26_IRB#NOT-2016-39 . For additional guidance, see the Benefits Administration Letter 19-102, dated May 20, 2019, available at OPM.gov/retirement-services/publications-forms/benefits- administration-letters/2019/19-102.pdf . Roth Thrift Savings Plan (TSP) balance. You may be able to contribute to a designated Roth account through the TSP known as the Roth TSP. Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. Qualified distributions from a Roth TSP aren’t included in your income. See Thrift Savings Plan under Part II, later, for more information. Rollovers. You can roll over certain amounts from the CSRS, FERS, or TSP to a qualified retirement plan or an IRA. See Rollover Rules under Part II, later. Rollovers by surviving spouse. You may be able to roll over a distribution you receive as the surviving spouse of a deceased employee or retiree into a qualified retirement plan or an IRA. See Rollover Rules under Part II, later. TSP beneficiary participant accounts. If you are the spouse beneficiary of a decedent’s TSP account, you have the option of leaving the death benefit payment in a TSP account in your own name (a beneficiary participant account). The amounts in the beneficiary participant account are neither taxable nor reportable until you choose to make a withdrawal, or otherwise receive a distribution from the account. Benefits for public safety officer’s survivors. A survivor annuity received by the spouse, former spouse, or child of a public safety officer killed in the line of duty will generally be excluded from the recipient’s income. For more information, see Dependents of public safety officers under Part II, later. Uniformed services TSP accounts. If you have a uniformed services TSP account, it may include contributions from combat pay. This pay is tax exempt and contributions attributable to that pay are tax exempt when they are distributed from the uniformed services TSP account. However, any earnings on those contributions are subject to tax when they are distributed. See Roth TSP balance, later, to get more information about Roth contributions. The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. If you have both a civilian and a uniformed services TSP account, you should apply the rules discussed in this publication separately to each account. You can get more information from the TSP website, TSP.gov, or the TSP Service Office. Photographs of missing children. The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC) . Photographs of missing children se- lected by the Center may appear in this publication on pa- ges that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

This publication explains how the federal income tax rules apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. These benefits are paid primarily under the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS).

Tax rules for annuity benefits. Part of the annuity benefits you receive is a tax-free recovery of your contributions to the CSRS or FERS. The rest of your annuity benefits are taxable. How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the taxable and tax-free parts. See Rules for Retir- ees under Part II, later.

Thrift Savings Plan (TSP). The TSP provides federal employees with the same savings and tax benefits that many private employers offer their employees. This plan is similar to 401(k) plans offered by the private sector. You can defer tax on part of your pay by having it contributed to your traditional balance in the plan. The contributions and earnings on them aren’t taxed until they are distributed to you. Also, the TSP offers a Roth TSP option. Contributions to this type of balance are after tax, and qualified distributions from the account are tax free. See Thrift Savings Plan under Part II, later.

Comments and suggestions. We welcome your comments about this publication and suggestions for future editions.

You can send us comments through IRS.gov/ FormComments . Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don’t send tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions. If you have a tax question not answered by this publication or the How To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/ Help/ITA where you can find topics by using the search feature or viewing the categories listed.

Getting tax forms, instructions, and publications. Go to IRS.gov/Forms to download current and prior-year forms, instructions, and publications.

Ordering tax forms, instructions, and publications. Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible.

2 Publication 721 (2025)

Don’t resubmit requests you’ve already sent us. You can get forms and publications faster online.

Useful Items You may want to see:

Publication

575

575 Pension and Annuity Income

590-A 590-A Contributions to Individual Retirement

Arrangements (IRAs)

590-B 590-B Distributions from Individual Retirement

Arrangements (IRAs)

939

939 General Rule for Pensions and Annuities

Form (and Instructions)

CSA 1099-R

CSF 1099-R

C S A 1099-R tatement of Annuity Paid

C S F 1099-R tatement of Survivor Annuity Paid

W-4P W -4P ithholding Certificate for Periodic Pension or

Annuity Payments

W-4R W -4R ithholding Certificate for Nonperiodic

Payments and Eligible Rollover Distributions

1099-R 1099-R Distributions From Pensions, Annuities,

Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

5329

5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

CAUTION tax shown on your return. Generally, you will owe

the penalty for 2026 if the additional tax you must pay with your return is $1,000 or more and more than 10% of the tax to be shown on your 2026 return. For more informa- tion, including exceptions to the penalty, see Pub. 505, Tax Withholding and Estimated Tax.

Form CSA 1099-R. Form CSA 1099-R is mailed to you by OPM each year. It will show any tax you had withheld. Attach a copy of Form CSA 1099-R to your tax return if any federal income tax was withheld.

You can also view and download your Form CSA 1099-R by visiting the OPM website at servicesonline.opm.gov . To log in, you will need your re- tirement CSA claim number, your social security number (SSN), and your password.

Choosing no withholding on payments outside the United States. The choice for no withholding generally can’t be made for annuity payments to be delivered outside the United States and its territories.

To choose no withholding if you are a U.S. citizen or resident alien, you must provide OPM with your home address in the United States or its territories. Otherwise, OPM has to withhold tax. For example, OPM must withhold if you provide aU.S. address for a nominee, trustee, or agent (such as a bank) to whom the benefits are to be

Publication 721 (2025) 3

delivered, but you don’t provide your own U.S. home address. Also, even if you provide a U.S. home address, any election of no withholding is not valid if your payment instructions provide that the payment is to be made to a financial institution or other person located outside the United States or its territories.

If you don’t provide a home address in the United States or its territories, you can choose not to have tax withheld only if you certify to OPM that you aren’t a U.S. citizen, a U.S. resident alien, or someone who left the United States to avoid tax. But if you so certify, you may be subject to the 30% flat (or lower treaty) rate withholding that applies to nonresident aliens. For details, see Pub. 519, U.S. Tax Guide for Aliens.

Withholding certificate. If you give OPM a Form W-4P for withholding on periodic pension or annuity payments, or Form W-4R for withholding on nonperiodic payments, you can choose not to have tax withheld or you can choose to have tax withheld. You can’t choose to have no tax withheld from eligible rollover distributions. The amount of federal income tax withheld depends on which form you need to complete. See the instructions for each form for more information. If you don’t complete Form W-4P, then for a payee who received a first periodic payment in 2025, OPM must withhold as if you were a single filer who made no entries in Step 2, Step 3, and Step 4 of Form W-4P. For the default 2025 withholding for a payee who first received a periodic payment before 2025, see Payee fails to furnish Form W-4P or provides an incorrect SSN on Form W-4P in Pub. 15-T. If you don’t complete Form W-4R, then for a nonperiodic payment, OPM must withhold federal income tax at 10%. For an eligible rollover distribution, the default withholding rate is 20%.

To change the amount of withholding or stop withholding, go to the OPM website at servicesonline.opm.gov . You will need your retirement CSA or CSF claim number and password. If you do not have a password, call or write OPM’s Retirement Information Office.

You can also change the amount of tax withholding or stop withholding by calling OPM’s Retirement Information Office at 1-888-767-6738. No special form is needed. You will need your retirement CSA or CSF claim number and your SSN when you call. If you have TTY/TDD equipment, call 711.

Withholding from certain lump-sum payments. If you leave the federal government before becoming eligible to retire and you apply for a refund of your CSRS or FERS contributions, or you die without leaving a survivor eligible for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any interest payable. Tax will be withheld at a 20% rate on the interest distributed. However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estima

ted taxes. See Rollover Rules under Part II, later. If you receive only your contributions, no tax will be withheld.

Withholding from TSP payments. Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. The amount withheld is:

• 20% if the distribution is an eligible rollover distribution;

• 10% if it is a nonperiodic distribution other than an eligible rollover distribution; or

• Determined using the instructions and tables provided in Pub. 15-T, based on information you provide on Form W-4P, if it is a periodic distribution.

However, you can usually choose not to have tax withheld from TSP payments other than eligible rollover distributions. By January 31 after the end of the year in which you receive a distribution, the TSP will issue Form 1099-R showing the total distributions you received in the prior year and the amount of tax withheld.

For a detailed discussion of withholding on distributions from the TSP, see the TSP publications Tax Rules about TSP Payments, and Distributions. Both these publications are available on the TSP website at TSP.gov/forms .

Estimated tax. Generally, you must make estimated tax payments for 2026 if you expect to owe at least $1,000 in tax for 2026 (after subtracting your withholding and credits) and you expect your withholding and your credits to be less than the smaller of:

• 90% of the tax to be shown on your income tax return for 2026, or

• 100% of the tax shown on your 2025 income tax return (110% of that amount if the adjusted gross income shown on the return was more than $150,000 ($75,000 if your filing status for 2026 will be married filing separately)). The return must cover all 12 months.

You don’t have to pay estimated tax for 2026 if you were a U.S. citizen or resident alien for all of 2025 and you had no tax liability for the full 12-month 2025 tax year.

Pub. 505 and Form 1040-ES contain information that you can use to help you figure your estimated tax payments.

If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally don’t have to file a federal income tax return for that year. The gross income filing requirements for the tax year are in the Instructions for Form 1040.

Children. If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes a survivor annuity for one or more children, each child’s annuity counts as their own income (not yours) for federal income tax purposes.

If your child can be claimed as a dependent, treat the taxable part of their annuity as unearned income when applying the filing requirements for dependents.

4 Publication 721 (2025)

Form CSF 1099-R. Form CSF 1099-R will be mailed by January 31 after the end of each tax year. It will show the total amount of the annuity you received in the past year. It should also show, separately, the survivor annuity for a child or children. Only the part that is each individual’s survivor annuity should be shown on that individual’s Form 1040 or 1040-SR.

If your Form CSF 1099-R doesn’t separately show the amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 1099-R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099-R.

You can also view and download your Form CSF 1099-R by visiting the OPM website at servicesonline.opm.gov . To log in, you will need your re- tirement CSF claim number and password.

You may request a Summary of Payments, showing the amounts paid to you for your child(ren), from OPM by calling OPM’s Retirement Information Office at 1-888-767-6738. You will need your CSF claim number and your SSN when you call.

Taxable part of annuity. To find the taxable part of a retiree’s annuity when applying the filing requirements, see the discussion under Rules for Retirees in Part II ; or Rules for Disability Retirement and Credit for the Elderly or the Disabled in Part III , whichever applies. To find the taxable part of each survivor annuity when applying the filing re- quirements, see the discussion under Rules for Survivors of Federal Employees in Part IV ; or Rules for Survivors of Federal Retirees in Part V, whichever applies.

CAUTION defer tax on the full taxable amount if it is more

than the payment, you must add funds from another source.

The taxable part of the lump-sum payment doesn’t qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. It may also be subject to the 10% additional tax on early distributions if you separate from service before the calendar year in which you reach age 55, even if you reach age 55 in the year you receive the lump-sum payment. For more information, see Lump-Sum Distributions and Tax on Early Distributions in Pub. 575.

Worksheet B. Use Worksheet B (near the end of this publication) to figure the taxable part of your lump-sum payment. Be sure to keep the completed worksheet for your records.

To complete the worksheet, you will need to know the amount of your lump-sum credit and the present value of your annuity contract.

Lump-sum credit. Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). However, for purposes of the alternative annuity option, your lump-sum credit may also include deemed deposits and redeposits that OPM advanced to your retirement account so that you are given credit for the service they represent. Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and didn’t repay. You are treated as if you had received a lump-sum payment equal to the amount of your lump-sum credit and then had made a repayment to OPM of the advanced amounts.

Present value of your annuity contract. The present value of your annuity contract is figured using actuarial tables provided by the IRS.

If you are receiving a lump-sum payment under the alternative annuity option, you can write to the address below to find out the present value of your annuity contract.

Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. NW Washington, DC 20224-0002

Example. David Brown retired from the federal government in 2025, 1 month after his 55th birthday. He had contributed $31,000 to his retirement plan and chose to receive a lump-sum payment of that amount under the alternative annuity option. The present value of his annuity contract is $155,000.

The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown in the completed worksheet. The taxable part ($24,800) is also his net cost in the plan, which is used to figure the taxable part of his reduced annuity payments. See Reduced An- nuity , later.

Lump-sum payment in installments. If you choose the alternative annuity option, you will usually receive the lump-sum payment in one installment. The overall tax treatment is explained at the beginning of this discussion.

How to report. Add any actual or deemed payment of your lump-sum credit (defined earlier) to the total for Form 1040, 1040-SR, or 1040-NR, line 5a. Add the taxable amount to the total for Form 1040, 1040-SR, or 1040-NR, line 5b, unless you roll over the taxable part to your traditional IRA or a qualified retirement plan.

Publication 721 (2025) 9

Worksheet B.

Lump-Sum Payment for David Brown See the instructions under Alternative Annuity Option in Part II of this publication.

1. Enter your lump-sum credit (your cost in the plan at the annuity starting date) . . . . . . . . . . . . . . . . . 1. $ 31,000

2. Enter the present value of your annuity contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 155,000

3. Divide line 1 by line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 0.20

4. Tax-free amount. Multiply line 1 by line 3. ( Caution: Don’t include this amount on line 6 of Worksheet A in this publication.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. $ 6,200

5. Taxable amount (net cost in the plan). Subtract line 4 from line 1. Include this amount in the total on Form 1040, 1040-SR, or 1040-NR, line 5b. Also, enter this amount on line 2 of Worksheet A in this publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. $ 24,800

Reduced Annuity

If you have chosen to receive a lump-sum payment under the alternative annuity option, you will also receive reduced monthly annuity payments. These annuity payments each will have a tax-free and a taxable part. To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier.

To complete Worksheet A, line 2, you must reduce your cost in the plan by the tax-free part of the lump-sum payment you received. Enter as your net cost on line 2 the amount from Worksheet B, line 5. Don’t include the tax-free part of the lump-sum payment with other amounts recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost.

Example. The facts are the same as in the example for David Brown in the preceding discussion. In addition, Da- vid received 10 annuity payments in 2025 of $1,200 each. Using Worksheet A, he figures the taxable part of his annuity payments. He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). He doesn’t include the tax-free part of his lump-sum payment on Worksheet A, line 6. An example of David’s filled-in Worksheet A is shown in this publication.

Reemployment after choosing the alternative

CAUTION you retired and then you were reemployed by the

federal government before retiring again, your Form CSA 1099-R may show only the amount of your contributions to your retirement plan during your reemployment. If the amount on the form doesn’t include all your contributions, disregard it and use your total contributions to figure the taxable part of your annuity payments.

Annuity starting date before November 19, 1996. If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, the taxable and tax-free parts of your lump-sum payment and your annuity payments are figured using different rules. Under those rules, you don’t reduce your cost in the plan (Worksheet A, line 2) by the tax-free part of the lump-sum payment. However, you must include that tax-free amount

with other amounts previously recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost.

If, through the exercise or nonexercise of an election or option, you provide an annuity for your beneficiary at or after your death, you have made a gift. The gift may be taxable for gift tax purposes. The value of the gift is equal to the value of the annuity.

Joint and survivor annuity. If the gift is an interest in a joint and survivor annuity where only you and your spouse can receive payments before the death of the last spouse to die, the gift will generally qualify for the unlimited marital deduction. This will eliminate any gift tax liability with regard to that gift.

If you provide survivor annuity benefits for someone other than your current spouse, such as your former spouse, the unlimited marital deduction will not apply. This may result in a taxable gift.

More information. For information about the gift tax, see Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions.

If you have recently retired, the following discussions covering annual leave, voluntary contributions, and community property may apply to you.

Annual leave. A payment for accrued annual leave received on retirement is a salary payment. It is taxable as wages in the tax year you receive it.

Voluntary contributions. Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. They also include the regular contributions withheld from your salary after you have the years of service necessary for the maximum annuity allowed by law. Voluntary contributions aren’t the same as employee contributions to the TSP. See Thrift Savings Plan , later.

Additional annuity benefit. If you choose to receive an additional annuity benefit from your voluntary contributions, it is treated separately from the annuity benefit that

10 Publication 721 (2025)

Worksheet A.

Simplified Method for David Brown

See the instructions under Simplified Method in Part II of this publication.

• A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died before August 21, 1996.

Publication 721 (2025) 11

comes from the regular contributions deducted from your salary. This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. It doesn’t matter that you receive only one monthly check covering both benefits. Each year, you will receive a Form CSA 1099-R that will show how much of your total annuity received in the past year was from each type of benefit.

Figure the taxable and tax-free parts of your additional monthly benefits from voluntary contributions using the rules that apply to regular CSRS and FERS annuities, as explained earlier.

Refund of voluntary contributions. If you choose to receive a refund of your voluntary contributions plus accrued interest, the interest is taxable to you in the tax year it is distributed unless you roll it over to a traditional IRA or another qualified retirement plan. If you don’t have OPM transfer the interest to a traditional IRA or other qualified retirement plan in a direct rollover, tax will be withheld at a 20% rate. See Rollover Rules , later. The interest doesn’t qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. It may also be subject to the 10% additional tax on early distributions if you separate from service before the calendar year in which you reach age 55 (or before the earlier of age 50 or completing 25 years of service under the plan if you are a qualified public safety employee). For more information, see Lump-Sum Distributions and Tax on Early Distributions in Pub. 575.

Community property laws. State community property laws apply to your annuity. These laws will affect your income tax only if you file a return separately from your spouse.

Generally, the determination of whether your annuity is separate income (taxable to you) or community income (taxable to both you and your spouse) is based on your marital status and domicile when you were working. Regardless of whether you are now living in a community property state or a noncommunity property state, your current annuity may be community income if it is based on services you performed while married and domiciled in a community property state.

At any time, you have only one domicile even though you may have more than one home. Your domicile is your fixed and permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. The question of your domicile is mainly a matter of your intentions as indicated by your actions.

If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. The division is based on your periods of service and domicile in community and noncommunity property states while you were married.

For more information, see Pub. 555, Community Property.

If you retired from federal service and are later rehired by the federal government as an employee, you can continue to receive your annuity during reemployment. The employing agency will usually pay you the difference between your salary for your period of reemployment and your annuity. This amount is taxable as wages. Your annuity will continue to be taxed just as it was before. If you are still recovering your cost, you continue to do so. If you have recovered your cost, the annuity you receive while you are reemployed is generally fully taxable.

The following special rules apply to nonresident alien federal employees performing services outside the United States and to nonresident alien retirees and beneficiaries. A nonresident alien is an individual who isn’t a citizen or a resident alien of the United States.

Special rule for figuring your total contributions. Your contributions to the retirement plan (your cost) also include the government’s contributions to the plan to a certain extent. You include government contributions that wouldn’t have been taxable to you at the time they were contributed if they had been paid directly to you. For example, government contributions wouldn’t have been taxable to you if, at the time made, your services were performed outside the United States. Thus, your cost is increased by these government contributions, and the benefits that you, or your beneficiary, must include in income are reduced.

This method of figuring your total contributions doesn’t apply to any contributions the government made on your behalf after you became a citizen or a resident alien of the United States.

Limit on taxable amount. There is a limit on the taxable amount of payments received from the CSRS, the FERS, or the TSP by a nonresident alien retiree or nonresident alien beneficiary. Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. The numerator of the fraction is the retiree’s total U.S. Government basic pay, other than tax-exempt pay for services performed outside the United States. The denominator is the retiree’s total U.S. Government basic pay for all services.

Basic pay includes regular pay plus any standby differential. It doesn’t include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments.

To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. (For an annuity, first complete Worksheet A in this publication.)

12 Publication 721 (2025)

Worksheet C.

Limited Taxable Amount for Nonresident Alien

1. Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Form CSA 1099-R or CSF 1099-R) or TSP distributions (from Form 1099-R) . . . . . 1.

2. Enter the total U.S. Government basic pay other than tax-exempt pay for services performed outside the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Enter the total U.S. Government basic pay for all services . . . . . . . . . . . . . . . . . 3.

4. Divide line 2 by line 3 . . . . . . . . . . . . . . . 4.

5. Limited taxable amount. Multiply line 1 by line 4. Enter this amount on Form 1040-NR, line 5b . . . . . . . . . . . . . . 5.

Example 1. You are a nonresident alien who performed all services for the U.S. Government abroad as a nonresident alien. You retired and began to receive a monthly annuity of $200. Your total basic pay for all services for the U.S. Government was $100,000. All of your basic pay was tax exempt because it wasn’t U.S. source income.

The taxable amount of your annuity using Worksheet A in this publication is $720. You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows.

The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. You are a nonresi- dent alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows.

Worksheet C.

Limited Taxable Amount for Nonresident Alien—Example 2

Worksheet C.

Limited Taxable Amount for Nonresident Alien—Example 1

1. Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Form CSA 1099-R or CSF 1099-R) or TSP distributions (from Form 1099-R) . . . . . 1. $ 720

2. Enter the total U.S. Government basic pay other than tax-exempt pay for services performed outside the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 0

3. Enter the total U.S. Government basic pay for all services . . . . . . . . . . . . . . . . . 3. 100,000

4. Divide line 2 by line 3 . . . . . . . . . . . . . . . 4. 0

5. Limited taxable amount. Multiply line 1 by line 4. Enter this amount on Form 1040-NR, line 5b . . . . . . . . . . . . . . 5. 0

Example 2. You are a nonresident alien who performed services for the U.S. Government as a nonresident alien both within the United States and abroad. You retired and began to receive a monthly annuity of $240.

Your total basic pay for your services for the U.S. Government was $120,000; $40,000 was for work done in the United States and $80,000 was for your work done in a foreign country. The part of your total basic pay for your work done in a foreign country was tax exempt because it wasn’t U.S. source income.

1. Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Form CSA 1099-R or CSF 1099-R) or TSP distributions (from Form 1099-R) . . . . . 1. $ 1,980

2. Enter the total U.S. Government basic pay other than tax-exempt pay for services performed outside the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 40,000

3. Enter the total U.S. Government basic pay for all services . . . . . . . . . . . . . . . . . 3. 120,000

4. Divide line 2 by line 3 . . . . . . . . . . . . . . . 4. 0.333

5. Limited taxable amount. Multiply line 1 by line 4. Enter this amount on Form 1040-NR, line 5b . . . . . . . . . . . . . . 5. 659

Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. (However, see Roth TSP balance and Uniformed services TSP accounts next.) This is because neither the contributions to your tra- ditional TSP balance nor its earnings have been included previously in your taxable income. The way that you withdraw your account balance determines when you must pay the tax.

Roth TSP balance. The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. This means Roth TSP contributions are included in your income. The contribution limits are the same as the traditional TSP. You can elect to have part or all of your TSP contributions designated as a Roth TSP. Agency contributions will be part of your traditional TSP balance. Also, you can’t roll over any portion of your traditional TSP into your Roth TSP.

Qualified distributions from your Roth TSP aren’t included in income. This applies to both your contributions to the account and income earned on that account. A qualified distribution is generally a distribution that is:

• Made after a 5-tax-year period of participation; and

• Made on or after the date you reach age 59 ¹ /2, made to a beneficiary or your estate on or after your death, or attributable to your being disabled.

For more information, go to the TSP website, TSP.gov, or the TSP Service Office. See Pub. 575 for more information about designated Roth accounts.

Uniformed services TSP accounts. If you have a uniformed services TSP account that includes contributions from combat pay, the distributions attributable to those

Publication 721 (2025) 13

contributions are tax exempt. However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. See Roth TSP bal- ance, earlier, to get more information about Roth contributions. The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. You can get more information from the TSP website, TSP.gov, or the TSP Service Office.

Direct rollover by the TSP. If you ask the TSP to transfer any part of the money in your account, from traditional contributions and earnings, to a traditional IRA or other qualified retirement plan, the tax on that part is deferred until you receive payments from the traditional IRA or other plan. However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and earnings. Also, see Rollover Rules , later.

Direct rollover by the TSP to a Roth IRA. If you ask the TSP to transfer any part of the money in your account, from traditional contributions and earnings, to a Roth IRA, the amount transferred will be taxed in the current year. However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and earnings. Also, see Rollovers to Roth IRAs , later, for more informa- tion.

Note: A direct rollover of your Roth contributions and earnings in your TSP account if certain conditions are met (see Roth TSP balance, earlier) to a Roth 401(k), Roth 403(b), Roth 457(b), or Roth IRA aren’t subject to tax when they are transferred or when you receive payments from those accounts at a later date. This is because you already paid tax on those contributions. You can’t roll over Roth contributions and earnings in your TSP account to a traditional IRA or traditional SIMPLE IRA.

TSP annuity. If you ask the TSP to buy an annuity with the money in your account from traditional contributions and earnings, the annuity payments are taxed when you receive them. The payments aren’t subject to the 10% additional tax on early distributions, even if you are under age 55 when they begin. However, there is no tax on the annuity payments if the annuity is purchased using the money in your account from Roth contributions and earnings if certain conditions are met. See Roth TSP balance, earlier. This is because you already paid tax on those contributions.

Cash withdrawals. If you withdraw any of the money in your TSP account from traditional contributions and earnings, it is generally taxed as ordinary income when you receive it unless you roll it over into a traditional IRA or other qualified plan. (See Rollover Rules, later.) If you receive your entire TSP account balance in a single tax year, you may be able to use the 10-year tax option to figure your tax if the plan participant was born before January 2, 1936. See Lump-Sum Distributions in Pub. 575 for details. However, there is no tax if you withdraw money in your TSP account from Roth contributions and earnings if certain conditions are met. See Roth TSP balance, earlier.

If you receive a single payment or you choose to receive your account balance in monthly payments over a period of less than 10 years, the TSP must generally withhold 20% for federal income tax. If you choose to receive your account balance in monthly payments over a period of 10 or more years or a period based on your life expectancy, withholding is determined using the instructions and tables provided in Pub. 15-T, based on information you provide on Form W-4P. If you don’t submit Form W-4P then for a payee who received a first periodic payment in 2025, the TSP must withhold as if you were a single filer who made no entries in Step 2, Step 3, and Step 4 of Form W-4P. For the default 2025 withholding for a payee who first received a periodic payment before 2025, see Payee fails to furnish Form W-4P or provides an incorrect SSN on Form W-4P in Pub. 15-T. See also Withholding from Thrift Savings Plan payments , earlier, under Tax Withholding and Estimated Tax in Part I . However, there is no withholding requirement for amounts withdrawn from your TSP account that is from Roth contributions and earnings if certain conditions are met. See Roth TSP bal- ance, earlier, for a discussion of those conditions.

Tax on early distributions. Any money included in gross income from your TSP account before you reach age 59 ¹ /2 may be subject to the 10% additional tax on early distributions. However, this additional tax doesn’t apply in certain situations, including any of the following.

• You receive the distribution and separate from government service during or after the calendar year in which you reach age 55.

• You are a qualified public safety employee before the earlier of age 50 or completing 25 years of service under the plan if you are a qualified public safety employee.

• You receive a qualified disaster distribution. See Form 8915-F, Qualified Disaster Retirement Plan Distributions and Repayments, and its instructions.

• You choose to receive your account balance in substantially equal payments (not less than yearly) based on your life expectancy.

• You are totally and permanently disabled.

• You receive amounts from your Roth contributions that either represent a return of your cost (after-tax money) or you receive a qualified distribution from your Roth IRA. See Roth TSP balance, earlier. The earnings may be subject to the 10% additional tax depending on whether you met certain conditions.

Note: Changes to the initial distribution method or amount under the substantially equal payment exception may result in a recapture tax.

For more information and other exceptions to the 10% additional tax on early distributions, see Tax on Early Dis- tributions in Pub. 575.

Outstanding loan. If the TSP declares a distribution from your account because money you borrowed hasn't been repaid when you separate from government service, a

14 Publication 721 (2025)

plan loan offset will occur. A plan loan offset is the amount your account balance is reduced, or offset, to repay the loan from the plan (your unpaid loan balance and any unpaid interest). The distribution may also be subject to the 10% additional tax on early distributions. However, the tax will be deferred if you make a rollover contribution to a traditional IRA or other qualified plan equal to the declared distribution amount. See Rollover Rules , later.

If you withdraw any money from your TSP account in that same year, the TSP must withhold income tax of 20% of the total of the declared distribution and the amount withdrawn. However, no withholding is required for portions of the distribution that is from Roth contributions and earnings if certain conditions are met. See Roth TSP bal- ance , earlier.

More information. For more information about the TSP, see Summary of the Thrift Savings Plan. Also, see Tax Rules about TSP Payments and Distributions. These publications are available on the TSP website at TSP.gov/ forms . You may also call the TSP at 1-877-968-3778. For participants who are deaf, hard of hearing, or have a speech disability, dial 711 from any telephone.

If you withdraw cash or other assets from a qualified retirement plan in an eligible rollover distribution, you can generally defer tax on the distribution by rolling it over to another qualified retirement plan, a traditional IRA, or, after 2 years of participation in a SIMPLE IRA sponsored by your employer, a traditional SIMPLE IRA under that plan. You don’t include the amount rolled over in your income, and you can’t take a deduction for it. The amount rolled over is taxed later as the new program pays that amount to you. If you roll over amounts into a traditional IRA or traditional SIMPLE IRA, later distributions of these amounts from the traditional IRA or traditional SIMPLE IRA don’t qualify for capital gain treatment or the 10-year tax option. However, capital gain treatment or the 10-year tax option will be restored if the traditional IRA or traditional SIMPLE IRA contains only amounts rolled over from a qualified plan and these amounts are rolled over from the traditional IRA or traditional SIMPLE IRA into a qualified retirement plan. To qualify for capital gain treatment or the 10-year tax option, the plan participant must have been born before January 2, 1936.

You can also roll over a distribution from a qualified retirement plan into a Roth IRA or, after 2 years of participation in a SIMPLE IRA sponsored by your employer, a Roth SIMPLE IRA under that plan. Although the transfer of a distribution into a Roth IRA or Roth SIMPLE IRA is considered a rollover for Roth IRA purposes, it isn’t a tax-free transfer unless you are rolling over amounts from Roth contributions and earnings. See Rollovers to Roth IRAs, later, for more information.

Rollovers to SIMPLE IRAs. You can roll over amounts from a qualified retirement plan or an IRA into a SIMPLE IRA as follows.

1. During the first 2 years of participation in a SIMPLE IRA, you may roll over amounts from one SIMPLE IRA into another SIMPLE IRA.

2. After the first 2 years of participation in a SIMPLE IRA, you may roll over amounts from a SIMPLE IRA, a qualified retirement plan, or an IRA into a SIMPLE IRA.

Qualified retirement plan. For this purpose, a qualified retirement plan is generally:

• A qualified employee plan,

• A qualified employee annuity,

• A tax-sheltered annuity plan (403(b) plan), or

• An eligible state or local government section 457 deferred compensation plan.

The CSRS, FERS, and TSP are considered qualified retirement plans.

Distributions eligible for rollover treatment. If you receive a refund of your CSRS or FERS contributions when you leave government service, you can roll over any interest you receive on the contributions. You can’t roll over any part of your CSRS or FERS annuity payments.

You can roll over a distribution of any part of your TSP account balance except:

1. A distribution of your account balance that you choose to receive in (typically monthly, but not less frequently than annually) payments over:

a. Your life expectancy,

b. The joint life expectancies of you and your benefi ciary, or

c. A period of 10 years or more;

2. A required minimum distribution generally beginning at age 73;

3. A deemed distribution because of an unrepaid loan, if you haven’t separated from government service (see Outstanding loan under Thrift Savings Plan, earlier);

or

4. A hardship distribution.

In addition, a distribution to your beneficiary isn’t generally treated as an eligible rollover distribution. However, see Qualified domestic relations order (QDRO) , Rollovers by surviving spouse , and Rollovers by nonspouse benefi- ciary , later.

Direct rollover option. You can choose to have OPM or the TSP transfer any part of an eligible rollover distribution directly to another qualified retirement plan that accepts rollover distributions or to a traditional IRA, SIMPLE IRA, or Roth IRA.

There is an automatic rollover requirement for mandatory distributions. A mandatory distribution is a distribution made:

• Without your consent; and

Publication 721 (2025) 15

• Before you reach age 62 or normal retirement age, whichever is later.

The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. You can choose to have the distribution paid directly to you or rolled over directly to your traditional, SIMPLE, or Roth IRA or another qualified retirement plan. If you don’t make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer.

No tax withheld. If you choose the direct rollover option or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. However, if the rollover is to a Roth IRA, you may want to choose to have tax withheld because any amount rolled over is generally included in income. Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. Direct rollover amounts from Roth contributions and earnings don’t have tax withheld because you already paid tax on those amounts.

Payment to you option. If an eligible rollover distribution is paid to you, OPM or the TSP must withhold 20% for income tax even if you plan to roll over the distribution to another qualified retirement plan, or traditional, SIMPLE, or Roth IRA. However, the full amount is treated as distributed to you even though you actually receive only 80%. You must generally include in income any part (including the part withheld) that you don’t roll over within 60 days to another qualified retirement plan or to a traditional IRA or traditional SIMPLE IRA. Rollovers to Roth IRAs are generally included in income. Eligible rollover distributions that are from Roth contributions don’t have tax withheld because you already paid tax on those amounts.

If you leave government service before the calendar year in which you reach age 55 and are under age 59 ¹ /2 when a distribution is paid to you, you may have to pay the 10% additional tax on any part, including any tax withheld, that you don’t roll over. If you separate from service before the calendar year in which you reach age 55 (or before the earlier of age 50 or completing 25 years of service under the plan if you are a qualified public safety employee), it may be subject to an additional 10% tax on early distributions. See Roth TSP balance , earlier. Also, see Tax on Early Distributions in Pub. 575.

Exception to withholding. Withholding from an eligible rollover distribution paid to you isn’t required if the distributions for your tax year total less than $200.

Partial rollovers. A lump-sum distribution may qualify for capital gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. See Lump-Sum Distributions in Pub. 575. However, if you roll over any part of the distribution, the part you keep doesn’t qualify for this special tax treatment.

Rolling over more than amount received. If you want to roll over more of an eligible rollover distribution than the amount you received after income tax was withheld, you will have to add funds from some other source (such as your savings or borrowed amounts).

Example. You left government service at age 53. On February 3, 2025, you receive an eligible rollover distribution of $10,000 from your TSP account, which is from traditional contributions and earnings. The TSP withholds $2,000, so you actually receive $8,000. If you want to roll over the entire $10,000 to postpone including that amount in your income, you will have to get $2,000 from some other source and add it to the $8,000 you actually received.

If you roll over only $8,000, you must include in your income the $2,000 not rolled over. Also, you may be subject to the 10% additional tax on the $2,000.

Time for making rollover. You must generally complete the rollover of an eligible rollover distribution paid to you by the 60th day following the day on which you receive the distribution.

The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. There are three ways to obtain a waiver of the 60-day requirement.

• You qualify for an automatic waiver.

• You self-certify that you met the requirements of a waiver.

• You request and receive a letter ruling under the appropriate IRS Revenue Procedure. This Revenue Procedure is generally published in the first Internal Revenue Bulletin of the year.

For more information about requesting a waiver of the 60-day rollover requirement, rollovers permitted between the various types of retirement plans (including IRAs), and other topics regarding rollovers, see Rollovers in Pub. 590-A. For information about the extended rollover period for a qualified plan loan offset, see Plan loan offset under Time for making rollover in Pub. 575.

A letter ruling isn’t required if a financial institution receives the rollover funds during the 60-day rollover period, you follow all procedures required by the financial institution, and, solely due to an error on the part of the financial institution, the funds aren’t deposited into an eligible retirement account within the 60-day rollover period.

Frozen deposits. If an amount distributed to you becomes a frozen deposit in a financial institution during the 60-day period after you receive it, the rollover period is extended. An amount is a frozen deposit if you can’t withdraw it because of either:

• The bankruptcy or insolvency of the financial institution, or

• Any requirement imposed by the state in which the institution is located because of the bankruptcy or insolvency (or threat of it) of one or more financial institutions in the state.

The 60-day rollover period is extended by the period for which the amount is a frozen deposit and doesn’t end earlier than 10 days after the amount is no longer a frozen deposit.

16 Publication 721 (2025)

Qualified domestic relations order (QDRO). You may be able to roll over tax free all or part of a distribution you receive from the CSRS, the FERS, or the TSP under a court order in a divorce or similar proceeding. You must receive the distribution as the government employee’s spouse or former spouse (not as a nonspousal beneficiary). The rollover rules apply to you as if you were the employee. You can roll over the distribution if it is an eligible rollover distribution (described earlier) and it is made under a QDRO or, for the TSP, a qualifying order.

A QDRO or qualifying order is a judgment, decree, or order relating to payment of child support, alimony, or marital property rights. The payments must be made to a spouse, former spouse, child, or other dependent of a participant in the plan.

The order must contain certain information, including the amount or percentage of the participant’s benefits to be paid to each payee. It can’t require the plan to pay benefits in a form not offered by the plan, nor can it require the plan to pay increased benefits.

A distribution that is paid to a child or dependent under a QDRO or a qualifying order is taxed to the plan participant.

Rollovers by surviving spouse. You may be able to roll over tax free all or part of the CSRS, FERS, or TSP distribution you receive as the surviving spouse of a deceased employee or retiree. The rollover rules apply to you as if you were the employee or retiree. You can generally roll over the distribution into a qualified retirement plan or an IRA. An amount rolled over to a Roth IRA isn’t tax free unless you are rolling over amounts from Roth contributions and earnings. See Rollovers to Roth IRAs, later.

A distribution paid to a beneficiary other than the employee’s surviving spouse is generally not an eligible rollover distribution. However, see Rollovers by nonspouse beneficiary next.

Rollovers by nonspouse beneficiary. You may be able to roll over tax free all or a portion of a distribution you receive from the CSRS, FERS, or TSP of a deceased employee or retiree if you are a designated beneficiary (other than a surviving spouse) of the employee or retiree. The distribution must be a direct trustee-to-trustee transfer to your IRA that was set up to receive the distribution. The transfer will be treated as an eligible rollover distribution and the IRA will be treated as an inherited IRA. An amount rolled over to a Roth IRA isn’t tax free. See Rollovers to Roth IRAs, later. For information on inherited IRAs, see Pub. 590-A.

How to report. On your Form 1040, 1040-SR, or 1040-NR, report the total distributions from the CSRS, FERS, or TSP on line 5a. Report the taxable amount of the distributions (total distribution less the amount rolled over) on line 5b. Also, check box 1 for “Rollover” on line 5c.

If the rollover was made to a Roth IRA, see Rollovers to Roth IRAs , later, for reporting the rollover on your return.

Written explanation to recipients. The TSP or OPM must provide a written explanation to you within a reason

able period of time before making an eligible rollover distribution to you. It must tell you about all of the following.

• Your right to have the distribution paid tax free directly to another qualified retirement plan or to a traditional IRA or traditional SIMPLE IRA.

• The requirement to withhold tax from the distribution, unless it is from your Roth contributions and earnings, if it isn’t directly rolled over.

• The nontaxability of any part of the distribution that you roll over within 60 days after you receive the distribution.

• Other qualified retirement plan rules that apply, including those for lump-sum distributions, alternate payees, and cash or deferred arrangements.

• How the distribution rules of the plan to which you roll over the distribution may differ in their restrictions and tax consequences from the rules that apply to the plan making the distribution.

Note: Rollovers to Roth IRAs aren’t tax free and are included in income unless it is from your Roth contributions and earnings. See Rollovers to Roth IRAs, later.

Reasonable period of time. The TSP or OPM must provide you with a written explanation no earlier than 90 days and no later than 30 days before the distribution is made. However, you can choose to have the TSP or OPM make a distribution less than 30 days after the explanation is provided, as long as the following two requirements are met.

• You have the opportunity, for at least 30 days after the explanation is provided, to consider whether or not you want to make a direct rollover.

• The information you receive clearly states that you have the right to have 30 days to make a decision.

Contact the TSP or OPM if you have any questions about this information.

Rollovers to Roth IRAs

You can roll over distributions directly from the CSRS, FERS, and TSP to a Roth IRA.

You must include in your gross income distributions from the CSRS, FERS, and TSP that you would have had to include in income if you hadn’t rolled them over into a Roth IRA. You don’t include in gross income any part of a distribution that is a return of contributions that were taxable to you when paid. In addition, the 10% additional tax on early distributions doesn’t apply.

Any amount, which is from traditional TSP contributions and earnings, rolled over to a Roth IRA or Roth SIMPLE IRA is subject to the same rules for converting a traditional IRA into a Roth IRA. For more information, see Converting From Any Traditional IRA Into a Roth IRA in chapter 1 of Pub. 590-A.

Publication 721 (2025) 17

How to report. A rollover to a Roth IRA isn’t a tax-free distribution unless you are rolling over after-tax contributions you made such as your Roth contributions and earnings. Report a rollover from a qualified retirement plan to a Roth IRA on Form 1040, 1040-SR, or 1040-NR, lines 5a and 5b.

Enter the total amount of the distribution before income tax or deductions were withheld on Form 1040, 1040-SR, or 1040-NR, line 5a. This amount is shown in box 1 of Form 1099-R. From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were taxable to you when made. From that result, subtract the amount of any qualified rollover from a designated Roth account. Enter the remaining amount, even if zero, on Form 1040, 1040-SR, or 1040-NR, line 5b.

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 your dependent(s). 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 premiums paid 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.

For this purpose, an eligible retirement plan is a governmental plan that is:

• A qualified trust,

• A section 403(a) plan,

• A section 403(b) annuity, or

• A section 457(b) plan.

The CSRS and FERS are considered eligible retirement plans.

You can exclude from income only the smaller of

CAUTION is true if the distribution was made directly from

the plan to the provider of the accident or health plan or long-term care insurance contract or if the distribution was made to you and you paid the provider of the accident or health plan or long-term care insurance contract. If you re- ceived a distribution from your eligible retirement plan, and you used part of that distribution to pay premiums for an accident or health plan or long-term care insurance con- tract, you can still exclude from income only the smaller of the amount of the premiums paid or $3,000. The rest of the distribution is taxable to you and should be reported as described next.

How to report. If you make this election, reduce the otherwise taxable amount of your annuity by the amount excluded. The taxable annuity shown on Form CSA 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 line 1h of Form 1040, 1040-SR, or 1040-NR, include only the taxable amount on that line and enter “PSO” and the amount excluded on the dotted line next to the applicable line.

CAUTION

If you must include any amount in your income, you may have to increase your withholding or make estimated tax payments. See Pub. 505.

Choosing the right option. Table 1 may help you decide which distribution option to choose. Carefully compare the effects of each option.

Table 1. Comparison of Payment to You Versus Direct Rollover

If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a

18 Publication 721 (2025)

If you received annuity benefits that aren’t fully taxable, report the total received for the year on Form 1040, 1040-SR, or 1040-NR, line 5a. Also, include on that line the total of any other pension plan payments (even if fully taxable, such as those from the TSP) that you received during the year in addition to the annuity. Report the taxable amount of these total benefits on Form 1040, 1040-SR, or 1040-NR, line 5b. However, if you use Form 4972, Tax on Lump-Sum Distributions, to report the tax on any amount, don’t include that amount on line 5a or 5b. Instead, follow the Form 4972 instructions.

If you received only fully taxable payments from your retirement, the TSP, or other pension plan, report on Form 1040, 1040-SR, or 1040-NR, line 5b, the total received for the year (except for any amount reported on Form 4972). No entry is required on Form 1040, 1040-SR, or 1040-NR, line 5a.

CAUTION

The special death benefit paid to the spouse of a FERS employee (see FERS Death Benefit , ear- lier) isn’t eligible for this exclusion.

If a federal employee dies before retiring and leaves no one eligible for a survivor annuity, the estate or other beneficiary will receive a lump-sum payment from the CSRS or FERS. This single payment is made up of the regular contributions to the retirement fund plus accrued interest, if any, to the extent not already paid to the employee.

The beneficiary is taxed, in the year the lump sum is distributed or made available, only on the amount of any accrued interest. The taxable amount, if any, generally can’t be rolled over into an IRA or other plan and is subject to federal income tax withholding at a 10% rate. However, a nonspousal beneficiary making a transfer described under Rollovers by nonspouse beneficiary under Rollover Rules in Part II , earlier, can roll over any taxable amount. In addition, the payment may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. If the beneficiary also receives a lump-sum payment of unrecovered voluntary contributions plus interest, this treatment applies only if the payment is received within the same tax year. For more information, see Lump-Sum Dis- tributions in Pub. 575.

24 Publication 721 (2025)

Worksheet D. Lump-Sum Payment the payment isn’t eligible for rollover treatment. The TSP

at End of Survivor will withhold 10% of the payment for federal income tax, Annuity—Example unless you gave the TSP a Form W-4R to choose not to

have tax withheld.

Lump-Sum Payment at End of Survivor Annuity—Example

1. Enter the lump-sum payment . . . . . . 1. $ 38,400

2. Enter the amount of annuity previously received tax free . . . . . . . . . . . . . . . . . 2. 1,000

3. Add lines 1 and 2 . . . . . . . . . . . . . . . . 3. 39,400

4. Enter the employee’s total cost . . . . . 4. 45,000

5. Taxable amount. Subtract line 4 from line 3. Enter the result, but not less than zero . . . . . . . . . . . . . . . . . . . . . . . 5. 0

Voluntary contributions. If a CSRS employee dies before retiring from government service, voluntary contributions to the retirement fund can’t be used to provide an additional annuity to the survivors. Instead, the voluntary contributions plus any accrued interest will be paid in a lump sum to the estate or other beneficiary. The beneficiary must generally include any interest received in income for the year distributed or made available. However, if the beneficiary is the employee’s surviving spouse (or someone other than the employee’s spouse making a transfer described under Rollovers by nonspouse benefi- ciary under Rollover Rules in Part II , earlier), the interest can be rolled over. See also Rollovers by surviving spouse under Rollover Rules in Part II , earlier.

The interest, if not rolled over, is generally subject to federal income tax withholding at a 20% rate (or 10% rate if the beneficiary isn’t the employee’s surviving spouse). It may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option if:

• The plan participant was born before January 2, 1936;

• Regular annuity benefits can’t be paid under the retirement system; and

• The beneficiary also receives a lump-sum payment of the regular contributions plus interest within the same tax year as the voluntary contributions.

For more information, see Lump-Sum Distributions in Pub. 575.

The payment you receive as the beneficiary of a decedent’s TSP account is fully taxable except for the portion that is from Roth contributions and earnings if certain conditions are met. See Roth TSP balance , earlier. However, if you are the decedent’s surviving spouse (or someone other than the employee’s spouse making a transfer described under Rollovers by nonspouse beneficiary under Rollover Rules in Part II , earlier), you can generally roll over the payment tax free. If you don’t choose a direct rollover of the decedent’s TSP account, mandatory 20% income tax withholding will apply unless it is from Roth contributions. See Roth TSP balance , earlier. For more information, see Rollover Rules in Part II, earlier. If you are neither the surviving spouse nor someone other than the employee’s spouse making a transfer described above,

If the entire TSP account balance is paid to the beneficiaries in the same calendar year, it may qualify as a lump-sum distribution eligible for the 10-year tax option if the plan participant was born before January 2, 1936. See Lump-Sum Distributions in Pub. 575 for details. Also, see the TSP publication Tax Rules about TSP payments, available on the TSP website at TSP.gov/forms .

Beneficiary participant account. A beneficiary participant account will be established for a spouse beneficiary. The money in the account isn’t subject to federal income tax until it is withdrawn. However, the portion that is from Roth contributions and earnings, if certain conditions are met, will not be subject to tax. See Roth TSP balance, earlier, for a discussion of the conditions. For more information on beneficiary participant accounts, see the TSP publication Your TSP Account: A Guide for Beneficiary Participants, available on the TSP website at TSP.gov/ forms .

If you receive a payment from a uniformed serv-

CAUTION combat pay, see Uniformed services TSP ac-

counts under Reminders near the beginning of this publi- cation.

Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, must be filed for the estate of a citizen or resident alien of the United States who died in 2025 if the gross estate is more than $13,990,000. Included in this $13,990,000 are any adjusted taxable gifts made by the decedent after 1976 and the specific exemption allowed for gifts by the decedent after September 8, 1976, and before 1977.

The gross estate generally includes the value of all property beneficially owned by the decedent at the time of death. Examples of property included in the gross estate are salary or annuity payments that had accrued to an employee or retiree, but which weren’t paid before death, and the balance in the decedent’s TSP account.

The gross estate also usually includes the value of the death and survivor benefits payable under the CSRS or the FERS. If the federal employee died leaving no one eligible to receive a survivor annuity, the lump sum (representing the employee’s contribution to the retirement system plus any accrued interest) payable to the estate or other beneficiary is included in the employee’s gross estate.

Marital deduction. The estate tax marital deduction is a deduction from the gross estate of the value of property that is included in the gross estate but that passes, or has passed, to the surviving spouse. Generally, there is no limit on the amount of the marital deduction. Community

Publication 721 (2025) 25

property passing to the surviving spouse qualifies for the marital deduction.

More information. For more information, see Pub. 559, Survivors, Executors, and Administrators.

CAUTION combat pay, see Uniformed services TSP ac-

counts under Reminders near the beginning of this publi- cation.

A federal estate tax return may have to be filed for the estate of the retired employee. See Federal Estate Tax under Part IV, earlier.

Publication 721 (2025) 27

Any income that a decedent had a right to receive and could have received had death not occurred and that wasn’t properly includible in the decedent’s final income tax return is treated as income in respect of a decedent. This includes retirement benefits accrued and payable to a retiree before death, but paid to you as a survivor.

If the federal estate tax was paid on the decedent’s estate and you are required to include income in respect of a

decedent in your gross income for any tax year, you can deduct the portion of the federal estate tax that is from the inclusion in the estate of the right to receive that amount. For this purpose, if the decedent died after the annuity starting date, the taxable portion of a survivor annuity you receive (other than a temporary annuity for a child) is considered income in respect of a decedent.

For more information, see Income in Respect of a De- cedent in Pub. 559.

28 Publication 721 (2025)

This section contains blank Worksheets A and B for you to use for your own calculations.

Worksheet A.

Simplified Method

See the instructions under Simplified Method in Part II of this publication.

• A death benefit exclusion of up to $5,000 applies to certain benefits received by survivors of employees who died before August 21, 1996.

Publication 721 (2025) 29

Worksheet B.

Lump-Sum Payment See the instructions under Alternative Annuity Option in Part II of this publication.

1. Enter your lump-sum credit (your cost in the plan at the annuity starting date) . . . . . . . . . . . . . . . . . . . . . 1.

2. Enter the present value of your annuity contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Divide line 1 by line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4. Tax-free amount. Multiply line 1 by line 3. ( Caution: Don’t include this amount on line 6 of Worksheet A in this publication.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Taxable amount (net cost in the plan). Subtract line 4 from line 1. Include this amount in the total on Form 1040, 1040-SR, or 1040-NR, line 5b. Also, enter this amount on line 2 of Worksheet A in this publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, forms, or instructions, go to IRS.gov to find resources that can help you right away.

Tax reform. Tax reform legislation impacting federal taxes, credits, and deductions was enacted in P.L. 119-21, commonly known as the One Big Beautiful Bill Act, on July 4, 2025. Go to IRS.gov/OBBB for more information and updates on how this legislation affects your taxes.

Preparing and filing your tax return. After receiving all your wage and earnings statements (Forms W-2, W-2G, 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment compensation statements (by mail or in a digital format) or other government payment statements (Form 1099-G); and interest, dividend, and retirement statements from banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you qualify for free tax preparation, or hire a tax professional to prepare your return.

Free options for tax preparation. Your options for preparing and filing your return online or in your local community, if you qualify, include the following.

• Free File. This program lets you prepare and file your federal individual income tax return for free using software or Free File Fillable Forms. However, state tax preparation may not be available through Free File. Go to IRS.gov/FreeFile to see if you qualify for free online federal tax preparation, e-filing, and direct deposit or payment options.

• VITA. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people with low-to-moderate incomes, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. Go to IRS.gov/ VITA, download the free IRS2Go app, or call

800-906-9887 for information on free tax return prepa- ration.

• TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. Go to IRS.gov/TCE or download the free IRS2Go app for information on free tax return preparation.

• MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military OneSource. For more information, go to MilitaryOneSource ( MilitaryOneSource.mil/MilTax ).

Also, the IRS offers Free Fillable Forms, which can be completed online and then e-filed regardless of income.

Using online tools to help prepare your return. Go to IRS.gov/Tools for the following.

• The Earned Income Tax Credit Assistant ( IRS.gov/ EITCAssistant ) determines if you’re eligible for the

earned income credit (EITC).

• The Online EIN Application ( IRS.gov/EIN ) helps you get an employer identification number (EIN) at no cost.

• The Tax Withholding Estimator ( IRS.gov/W4App ) makes it easier for you to estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.

• The Sales Tax Deduction Calculator ( IRS.gov/ SalesTax ) figures the amount you can claim if you

itemize deductions on Schedule A (Form 1040).

Getting answers to your tax questions. On IRS.gov, you can get up-to-date information on current events and changes in tax law.

• IRS.gov/Help : A variety of tools to help you get an-

swers to some of the most common tax questions.

• IRS.gov/ITA : The Interactive Tax Assistant, a tool that

will ask you questions and, based on your input, pro- vide answers on a number of tax topics.

• IRS.gov/Forms : Find forms, instructions, and publications. You will find details on the most recent tax

30 Publication 721 (2025)

changes and interactive links to help you find answers to your questions.

• You may also be able to access tax information in your e-filing software.

Need someone to prepare your tax return? There are various types of tax return preparers, including enrolled agents, certified public accountants (CPAs), accountants, and many others who don’t have professional credentials. If you choose to have someone prepare your tax return, choose that preparer wisely. A paid tax preparer is:

• Primarily responsible for the overall substantive accuracy of your return,

• Required to sign the return, and

• Required to include their preparer tax identification number (PTIN).

Although the tax preparer always signs the return,

CAUTION information required for the preparer to accurately

prepare your return and for the accuracy of every item re- ported on the return. Anyone paid to prepare tax returns for others should have a thorough understanding of tax matters. For more information on how to choose a tax pre- parer, go to Tips for Choosing a Tax Preparer on IRS.gov.

Employers can register to use Business Services On- line. The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process Form W-2, Wage and Tax Statement; and Form W-2c, Corrected Wage and Tax Statement.

Business tax account. If you are a sole proprietor, a partnership, an S corporation, a C corporation, or a single-member limited liability company (LLC), you can view your tax information on record with the IRS and do more with a business tax account. Go to IRS.gov/ BusinessAccount for more information.

IRS social media. Go to IRS.gov/SocialMedia to see the various social media tools the IRS uses to share the latest information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our highest priority. We use these tools to share public information with you. Don’t post your social security number (SSN) or other confidential information on social media sites. Always protect your identity when using any social networking site.

The following IRS YouTube channels provide short, informative videos on various tax-related topics in English and ASL.

• Youtube.com/irsvideos .

• Youtube.com/irsvideosASL .

Over-the-Phone Interpreter (OPI) Service. The IRS offers the OPI Service to taxpayers needing language interpretation. The OPI Service is available at Taxpayer Assis

tance Centers (TACs), most IRS offices, and every VITA/TCE tax return site. This service is available in Spanish, Mandarin, Cantonese, Korean, Vietnamese, Russian, and Haitian Creole.

Accessibility Helpline available for taxpayers with disabilities. Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and future accessibility products and services available in alternative media formats (for example, braille-ready, large print, audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or account-related issues, go to IRS.gov/ LetUsHelp .

Alternative media preference. Form 9000, Alternative Media Preference, or Form 9000(SP) allows you to elect to receive certain types of written correspondence in the following formats.

• Standard Print.

• Large Print.

• Braille.

• Audio (MP3).

• Plain Text File (TXT).

• Braille-Ready File (BRF).

Disasters. Go to IRS.gov/DisasterRelief to review the available disaster tax relief.

Getting tax forms and publications. Go to IRS.gov/ Forms to view, download, or print all the forms, instructions, and publications you may need. Or you can go to IRS.gov/OrderForms to place an order.

Mobile-friendly forms. You’ll need an IRS Online Account (OLA) to complete mobile-friendly forms that require signatures. You’ll have the option to submit your form(s) online or download a copy for mailing. You’ll need scans of your documents to support your submission. Go to IRS.gov/MobileFriendlyForms for more information.

Getting tax publications and instructions in eBook format. Download and view most tax publications and instructions (including the Instructions for Form 1040) on mobile devices as eBooks at IRS.gov/eBooks .

IRS eBooks have been tested using Apple’s iBooks for iPad. Our eBooks haven’t been tested on other dedicated eBook readers, and eBook functionality may not operate as intended.

Access your online account (individual taxpayers only). Go to IRS.gov/Account to securely access information about your federal tax account.

• View the amount you owe and a breakdown by tax year.

• See payment plan details or apply for a new payment plan.

Publication 721 (2025) 31

• Make a payment or view 5 years of payment history and any pending or scheduled payments.

• Access your tax records, including key data from your most recent tax return, and transcripts.

• View digital copies of select notices from the IRS.

• Approve or reject authorization requests from tax professionals.

Get a transcript of your return. With an online account, you can access a variety of information to help you during the filing season. You can get a transcript, review your most recently filed tax return, and get your adjusted gross income. Create or access your online account at IRS.gov/ Account .

Tax Pro Account. This tool lets your tax professional submit an authorization request to access your individual taxpayer IRS OLA. For more information, go to IRS.gov/ TaxProAccount .

Using direct deposit. The safest and easiest way to receive a tax refund is to e-file and choose direct deposit, which securely and electronically transfers your refund directly into your financial account. Direct deposit also avoids the possibility that your check could be lost, stolen, destroyed, or returned undeliverable to the IRS. Eight in 10 taxpayers use direct deposit to receive their refunds. If you don’t have a bank account, go to IRS.gov/ DirectDeposit for more information on where to find a bank or credit union that can open an account online.

Reporting and resolving your tax-related identity theft issues.

• Tax-related identity theft happens when someone steals your personal information to commit tax fraud. Your taxes can be affected if your SSN is used to file a fraudulent return or to claim a refund or credit.

• The IRS doesn’t initiate contact with taxpayers by email, text messages (including shortened links), telephone calls, or social media channels to request or verify personal or financial information. This includes requests for personal identification numbers (PINs), passwords, or similar information for credit cards, banks, or other financial accounts.

• Go to IRS.gov/IdentityTheft, the IRS Identity Theft Central webpage, for information on identity theft and data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or stolen or you suspect you’re a victim of tax-related identity theft, you can learn what steps you should take.

• Get an Identity Protection PIN (IP PIN). IP PINs are six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN. To learn more, go to IRS.gov/IPPIN .

Ways to check on the status of your refund.

• Go to IRS.gov/Refunds .

• Download the official IRS2Go app to your mobile device to check your refund status.

• Call the automated refund hotline at 800-829-1954.

The IRS can’t issue refunds before mid-February

CAUTION child tax credit (ACTC). This applies to the entire

refund, not just the portion associated with these credits.

Making a tax payment. The IRS recommends paying electronically whenever possible. Options to pay electronically are included in the list below. Payments of U.S. tax must be remitted to the IRS in U.S. dollars. Digital assets are not accepted. Go to IRS.gov/Payments for information on how to make a payment using any of the following options.

• IRS Direct Pay : Pay taxes from your bank account. It’s

free and secure, and no sign-in is required. You can change or cancel within 2 days of scheduled payment.

• Debit Card, Credit Card, or Digital Wallet : Choose an

approved payment processor to pay online or by phone.

• Electronic Funds Withdrawal : Schedule a payment

when filing your federal taxes using tax return prepara- tion software or through a tax professional.

• Electronic Federal Tax Payment System : This is the

best option for businesses. Enrollment is required.

• Check or Money Order : Mail your payment to the ad-

dress listed on the notice or instructions.

• Cash : You may be able to pay your taxes with cash at

a participating retail store.

• Same-Day Wire : You may be able to do same-day

wire from your financial institution. Contact your finan- cial institution for availability, cost, and time frames.

Note: The IRS uses the latest encryption technology to ensure that the electronic payments you make online, by phone, or from a mobile device using the IRS2Go app are safe and secure. Paying electronically is quick and easy.

What if I can’t pay now? Go to IRS.gov/Payments for more information about your options.

• Apply for an online payment agreement ( IRS.gov/ OPA ) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved.

• Use the Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe. For more information on the Offer in Compromise program, go to IRS.gov/OIC .

Filing an amended return. Go to IRS.gov/1040X for information and updates.

32 Publication 721 (2025)

Checking the status of your amended return. Go to IRS.gov/WMAR to track the status of Form 1040-X amended returns.

TAS helps taxpayers resolve problems with the IRS, makes administrative and legislative recommendations to prevent or correct the problems, and protects taxpayer rights. We work to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights. We are Your Voice at the IRS.

How Can TAS Help Me?

TAS can help you resolve problems that you haven’t been able to resolve with the IRS on your own. Always try to resolve your problem with the IRS first, but if you can’t, then come to TAS. Our services are free .

• TAS helps all taxpayers (and their representatives), including individuals, businesses, and exempt organizations. You may be eligible for TAS help if your IRS problem is causing financial difficulty, if you’ve tried and been unable to resolve your issue with the IRS, or if you believe an IRS system, process, or procedure just isn’t working as it should.

• To get help any time with general tax topics, visit www.TaxpayerAdvocate.IRS.gov . The site can help

you with common tax issues and situations, such as what to do if you make a mistake on your return or if you get a notice from the IRS.

• TAS works to resolve large-scale (systemic) problems that affect many taxpayers. You can report systemic issues at www.IRS.gov/SAMS . (Be sure not to include any personal identifiable information.)

How Do I Contact TAS?

TAS has offices in every state, the District of Columbia, and Puerto Rico. To find your local advocate’s number:

• Go to www.TaxpayerAdvocate.IRS.gov/Contact-Us ,

• Check your local directory, or

• Call TAS toll free at 877-777-4778.

What Are My Rights as a Taxpayer?

The Taxpayer Bill of Rights describes ten basic rights that all taxpayers have when dealing with the IRS. Go to www.TaxpayerAdvocate.IRS.gov/Taxpayer-Rights for more information about the rights, what they mean to you, and how they apply to specific situations you may encounter with the IRS. TAS strives to protect taxpayer rights and ensure the IRS is administering the tax law in a fair and equitable way.

CAUTION

It can take up to 3 weeks from the date you filed your amended return for it to show up in our sys- tem, and processing it can take up to 16 weeks.

Understanding an IRS notice or letter you’ve re- ceived. Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.

IRS Document Upload Tool. You may be able to use the Document Upload Tool to respond digitally to eligible IRS notices and letters by securely uploading required documents online through IRS.gov. For more information, go to IRS.gov/DUT .

Schedule LEP. You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that began providing translations in 2023. You will continue to receive communications, including notices and letters, in English until they are translated to your preferred language.

Contacting your local TAC. Keep in mind, many questions can be answered on IRS.gov without visiting a TAC. Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment, so you’ll know in advance that you can get the service you need without long wait times. Before you visit, go to IRS.gov/TAC to find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”

———————————————————————— Below is a message to you from the Taxpayer Advocate Service, an independent organization established by Congress.

What Is the Taxpayer Advocate Service?

The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS).

Publication 721 (2025) 33

To help us develop a more useful index, please let us know if you have ideas for index entries. Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

Refund of contributions 3 Retirees, rules for 5 Retirement during the past year 10 Rollovers :

Nonspouse beneficiary 17 Rollover rules 15 SIMPLE IRAs 15 To Roth IRAs 17 Roth Thrift Savings Plan 13

S SIMPLE IRAs 15 Simplified Method 6, 26 Substantial gainful activity 20 Survivor annuity 5, 21, 26 Survivors of federal employees 21 Survivors of federal retirees 26

T Tax help 30 Thrift Savings Plan 2, 13

Roth option 13

U Uniformed services Thrift Savings

Plan 2 Unused annual leave 20

V Voluntary contributions 10, 25, 27

A Alternative annuity option :

Lump-sum payment 9 Annual leave 10 Annuity :

Starting date 5 Statement 5 With survivor benefit 21 Without survivor benefit 5 Assistance ( See Tax help)

B Benefits, how to report 19

CSF 1099-R 5 W-4P 4 W-4R 4

G General Rule 7, 26 Gift tax 10

I Income in respect of a decedent 28 Income tax withholding 3, 19

L Lump-sum CSRS or FERS

C Child’s temporary annuity 22 Community property laws 12 Contributions, refund of 3 Cost (contributions to retirement

payment 24, 27 Lump-sum payment :

Alternative annuity option 9 Installments 9 Withholding 4

plan) 5 Credit for the elderly or the

disabled 20

D Death benefit 21 Deduction for estate tax 28 Disability retirement 19 Disabled child 22 Distributions :

Qualified domestic relations order

(QDRO) 17 Withholding from TSP payments 4

E Estate tax 25, 28 Estimated tax 3, 4

M Mandatory retirement age 20 Marital deduction 25 Minimum retirement age 19

N Nonresident alien retiree 12

Dependents 21 Insurance premiums 18 Survivors 24 Publications ( See Tax help)

P Permanently and totally

disabled 20 Physician’s statement 20 Public safety officers :

W Withholding certificate 4 Withholding of income tax 3, 19 Worksheets :

Lump-sum payment at end of

F Federal Employees’ Compensation

Q Qualified domestic relations order

(QDRO) 17

R Reemployment after retirement 12

alternative annuity option 30 Nonresident alien retiree 12 Simplified Method 29

survivor annuity 24 Lump-sum payment to the estate or

Act (FECA) 20 Filing requirements 4 Form :

other beneficiary 27 Lump-sum payment under

1099-R 4 CSA 1099-R 3

34 Publication 721 (2025)