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CGCPA
CGCPA, CPA
Category: Finance
Satisfied Customers: 3820
Experience:  40+ years experience in taxes and financial planning
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I'm about to retire and will receive a small pension from my

Customer Question

I'm about to retire and will receive a small pension from my former employer. I have two questions regarding my pension.
1) Will I have to pay into Social Security on the pension income?
2) Will my employer have to show my pension as a liability on their financial statement and, if so, for what amount of money?
Submitted: 1 year ago.
Category: Finance
Expert:  CGCPA replied 1 year ago.

You will NOT need to pay into Social Security or Medicare on the amounts you receive for your pension.

As to your employer, the need to report the liability on their balance sheet is present only if it is an underfunded defined benefit plan. This is a plan type that accrues while you are employed. It does not impact the benefits you receive. Your employer will also be able to deduct the benefit accruals on their income/expense statements and tax returns.

Customer: replied 1 year ago.
Thank you!
Expert:  CGCPA replied 1 year ago.

You are welcome. Please feel free to return any time we can assist you. Also, now that I have assisted you, please be sure to rate my help.

Expert:  CGCPA replied 1 year ago.

Additionally, please remember that your pension will be taxable for Federal purposes and, in some cases at the state level as well.

Customer: replied 1 year ago.
No need to talk to you. You have answered my questions clearly..... Thanks
Expert:  CGCPA replied 1 year ago.
As before, you are welcome. The reason I asked you to rate my service is that we do not get credit for our work until and unless you do so.