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Publication 721 - Introductory Material

What's New

Expanded exception to the tax on early distributions from a governmental plan for qualified public safety employees. For tax years beginning after December 31, 2015, in addition to those employees described in Qualified public safety employees under Tax on Early Distributions in Publication 575, Pension and Annuity Income, the definition is expanded to include the following:

  • Federal law enforcement officers,

  • Federal customs and border protection officers,

  • Federal firefighters,

  • Air traffic controllers,

  • Nuclear materials couriers,

  • Members of the United States Capitol Police,

  • Members of the Supreme Court Police, and

  • Diplomatic security special agents of the United States Department of State.

In addition, the exception to the tax is extended to distributions from governmental defined contribution plans, as well as governmental defined benefit plans.See Tax on Early Distributions in Publication 575 for more information.

Rollovers to SIMPLE Retirement Accounts. Beginning after December 18, 2015, you are able to roll over amounts from a qualified retirement plan (as described under Rollover Rules, later) or an IRA into a SIMPLE retirement account as follows:

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

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

For more information, see Rollover Rules later.


Future developments. For the latest information about developments related to Publication 721, such as legislation enacted after it was published, go to

Phased retirement.  The new phased retirement program was signed into law by the Moving Ahead for Progress in the 21st Century Act. This new program will allow eligible employees to begin receiving annuity payments while working part-time. For information about phased retirement go to and click on the Retirement tab and then Phased Retirement.

At the time this publication was being published, guidance was being prepared for phased retirement. When this guidance is available, a link will be provided at

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 in Part II for more information.

Rollovers. You can roll over certain amounts from the CSRS, FERS, or TSP to a tax-sheltered annuity plan (403(b) plan) or a state or local government section 457 deferred compensation plan. See Rollover Rules in Part II.

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 in Part II.

Thrift Savings Plan (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 or 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 generally will be excluded from the recipient's income. For more information, see Dependents of public safety officers in Part IV.

Uniformed services Thrift Savings Plan (TSP) accounts. If you have a uniformed services TSP account, it may include contributions from combat zone 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. 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,, or the TSP Service Office.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages 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 benefits are taxable. If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the taxable and tax-free parts. If your annuity starting date is before November 19, 1996, you generally could have chosen to use the Simplified Method or the General Rule. See Part II, Rules for Retirees .

Thrift Savings Plan.   The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer their employees. This plan is similar to private sector 401(k) plans. 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 in Part II.

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

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Ordering forms and publications.    Visit to download forms and publications. Otherwise, you can go to to order current and prior-year forms and instructions. Your order should arrive within 10 business days.

Tax questions.   If you have a tax question not answered by this publication, check and How To Get Tax Help at the end of this publication.

Useful Items - You may want to see:


  • 524 Credit for the Elderly or the Disabled

  • 575 Pension and Annuity Income

  • 590-A Contributions to Individual Retirement Arrangements (IRAs)

  • 590-B Distributions from Individual Retirement Arrangements (IRAs)

  • 939 General Rule for Pensions and Annuities

Form (and Instructions)

  • CSA 1099R Statement of Annuity Paid

  • CSF 1099R Statement of Survivor Annuity Paid

  • W-4P Withholding Certificate for Pension or Annuity Payments

  • 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

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

See How To Get Tax Help near the end of this publication for information about getting publications and forms.

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