Tax tables in the US and Canada estimate the life-span of retirees for annuity and pension purposes. Ditto in other countries where the UN Pension is taxable. That denominator varies depending on tax status (single or married) and you must look up tax tables for the most up-to-date calculation.
Meanwhile, if you want to refresh yourself on this issue, you can read UN Pension - what divisor for tax-exemption. However, if you take a Pension Lump Sum payment you have immediately used up a significant portion of that pension recovery period. For instance, if the recovery period is 360 months, and you take a 1/3rd lump-sum payment, then you have effectively and immediately used 120 months of the recovery period so that you can claim partial tax-exemption of your pension fund only for the remaining 240 months. Once the recovery period is exhausted, then the pension will be taxed (US and Canada) with a zero exemption. For pension recovery, please use the simplified formula recommended by Robert Smith (AFICS, New York), and contact AFICS for the latest updates.
Those planning retirement shortly may also like to read:
- Pension Pandemonium - A rewind;
- Pension Payout - making the right decision?;
- US Pension - tax implications US citizens/residents;
- UN Pension Plan in the extended portfolio;
- Personal risk and pension;
- Why is the UN Pension tax-exempt?
- UN Pension tax exemption;
- Taxing matters - avoiding and evading taxes;
- A Pension Primer
Very informative and helpful. I was searching for this information but there are very limited resources. Thank you for providing this information.
Posted by: Finance Dissertation | June 11, 2011 at 12:59 AM