I am a disabled police officer retired since 1986 at age 56 with a full 25 year pension. I have a permanent disability - hearing loss of 80% - incurred while on the job. Since 1986 this pension has been non-taxable. I am told now by the IRS and my accountant since I have reached the age of 65 it becomes a retirement pension and taxable. Is this information correct?
1 Answer from Attorneys
Re: Taxable pensions
Yes, many police/fire pension plans provide for disabiity/retirement conversion based on mandatory retirement age. The payments become taxable at date of what would have been retirement since most such plans are involve limited participant contributions.