How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask winktax Your Own Question

winktax
winktax, Enrolled Agent
Category: Tax
Satisfied Customers: 425
Experience:  18 years experience as an Enrolled Agent, insurance agent, stock broker and financial advisor.
63158134
Type Your Tax Question Here...
winktax is online now
A new question is answered every 9 seconds

I am a soon-to-be-retired executive from a publicly traded

Resolved Question:

I am a soon-to-be-retired executive from a publicly traded financial institution. A portion of my employer paid pension is in a Benefits Equalization Plan for highly compensated individuals (a SERP). I have heard that FICA taxes need to be paid on this amount based on the present value of the pension payments over my life expectancy; I'm 63 years old. Are you able to direct me to where I may find the methodology (i.e., discount rate, actuarial tables, etc.) for caluculating the present value. Also, it sounds like the calculated FICA taxes are all paid upfront at commencemtn of receipt of the pension. Is that correct?
Submitted: 2 years ago.
Category: Tax
Expert:  Lindie-mod replied 2 years ago.
Hi, I’m a moderator for this topic and I wonder whether you’re still waiting for an answer. If you are, please let me know and I will do my best to find an Expert to assist you right away. If not, feel free to let me know and I will cancel this question for you. Thank you!
Customer: replied 2 years ago.
Yes, I am still looking for information on the FICA treatment for Benefit Equalization Pensions. I find it very odd that no one in my company's pension area has any knowledge on this topic, even though there is specific language in communication to me stating "BEP pension benefits are to be taxed for FICA. The calculation is to determine the present value over the life expectancy. FICA will need to paid at the commencement of pension payments." Beyond this, they are not able to tell me anything more.
Expert:  Lindie-mod replied 2 years ago.
Sometimes, finding the right Expert can take a little longer than expected and we thank you greatly for your understanding. We’ll be in touch again shortly.
Expert:  winktax replied 2 years ago.

A SERP is also referred to as a Nonqualified Deferred Compensation (NQDC) Plan.

Pension plans, lump sum payments, present value calculations are normally preformed using rates and formula’s provided by the PBGC “Pension Benefit Guaranty Corp” a US Govt Agency which is the agency that insures private pensions of certain employers (ie. Employers that go bankrupt). While the PBGC has many rates and formula’s the most basic formula used is the present value of an annuity formula using the prescribed rates from the PBGC. The current long term rate for lump sum’s is 4%.

The web site for PBGC rates & formula is http://www.pbgc.gov/prac/interest/monthly.html

Expert:  winktax replied 2 years ago.
I am not aware of any specific IRS rules as to how to value present value's of pensions, NQDC plans, there are lots of rules on taxablity of NQDC's. However in my experience all pension administrators use the PBGC rates as well as any pension plan covered under Employee Retirement Income Security Act (ERISA) which are most pension arrangements in the US. PBGC is a US government agency, use of their rates would be reasonable. If you were offered a lump sum payment on your base pension, the trustee would figure the payout using PBGC rates.
winktax, Enrolled Agent
Category: Tax
Satisfied Customers: 425
Experience: 18 years experience as an Enrolled Agent, insurance agent, stock broker and financial advisor.
winktax and 3 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.