Teacher Defined Benefit Pension Contributions

[kcladyjane]

I need help...I am working on my sister's taxes. She is a teacher in MO and pays into the PSRS defined benefit pension plan. On her W-2 it lists the RET and CAF in box 14 Other. So does she not get any credit for putting away retirement money? I am trying to figure out where to list the retirement contributions on her tax return. On normal w-2s it is listed in box 12.

Her wages were reduced by the RET amount.  Can I apply the RET amount towards the savers credit?  She qualifies based on income, but I wanted to make sure a defined benefit pension plan qualifies for the savings credit.

[taxref]

Many non-profits, including schools, have 414(h) retirement plans.  If that is the case with your sister, she would not be eligible for the Savers Credit.  That is because the Savers Credit is for voluntary contributions to a retirement plan, and 414(h) plans are mandatory.  Certain other types of retirement plans are employer-mandated as well, and similarly, do not qualify for the credit.

Some mandatory plans allow for extra voluntary contributions.   Voluntary contributions can count toward the Savers Credit.  You would first need to find out from your sister if she made any voluntary contributions.  If she did, she would have to determine exactly what kind of plan it was (ie: the code section number).  You would then have to see if the plan matched those mentioned in the instructions to Form 8880.

[rangerj]

I have never had clients in MO, but most public employee, e.g. teachers, firefighters, police, etc., do not get to deduct the contribution to their retirement plan. Their contributions will be part of the calculation of the taxable amount and non-taxable cost basis when they start getting their retirement pension. That having been said, many states have started additional plans for employees, like 401(k) plans, in which they can contribute pre-taxable income. Check with the plan trustees, or the teachers union, in order to determine what the amounts being deducted from her pay are for. This should lead you to the answer to your question, or get back to us with more information.