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I received a $13,000 payment from STRS(Calif Teachers Assn)

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and it was for a...
I received a $13,000 payment from STRS(Calif Teachers Assn) and it was for a mistake they made in computing my monthly retirement amount. It should have been higher and they determined, that from 1992 until 2015, I was entitled to the $13,000 back pay. My question is, can I not pay taxes on all of that amount in 2015? Is it possible to pay taxes on a portion of that $13,000 lets say in the next 10 years? (Like taxes on $1,300 for ten years?). I'm 85 and I'm running out of money.
Thanks for your time.
Daniel W. Street
Phone:(###) ###-####
E-Mail: [email protected] com (I'm not an attorney, my son is)
Submitted: 1 year ago.Category: Tax
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Answered in 12 minutes by:
2/1/2016
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,272
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi,

...

I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial & tax advice since 1986.

I can help here

...

No sorry, but there's no way to do exactly what you've described.

...

There IS, however, something called 10 year forward averaging (which is what you may be thinking of).

...

Ten-year forward averaging is a special tax computation available only to individuals born before 1936 that are taking a lump-sum distribution from their qualified retirement plan. Ten-year forward averaging allows you to figure the tax on your lump-sum distribution by applying 1986 tax rates to one-tenth of the amount of your distribution, then multiplying the resulting tax amount by ten. This tax is payable for the year in which you receive the lump-sum distribution.

..

So, although this doesn't have NEARLY the benefit of doing what you mentioned ... it DOES have advantages:

...

First, you treat the lump-sum distribution as a completely separate tax calculation. In other words, even if you have other employment or investment income in the year i you receive the distribution, you don't add the distribution amount to the other income (as would be the normal taxation) to calculate your taxes. This may keep income from both sources in a lower tax bracket

...

The second potential advantage is that the tax on your lump-sum distribution is 10 times the tax on one-tenth the amount.

...

This will certainly keep you in a lower tax bracket, because we are in a progressive tax system where every incremental dollar moves us higher and higher into the higher tax RATES

...

One other thought, you might ask the pension administrator if you can receive as annual amounts as you should have, so that you are only taxed on amounts AS you receive them

...

But again, so sorry, there's no way to simply NOT pay the tax and defer to future years, UNLESS, given that this was their error, they will accommodate a deferred payout.

...

I hope you'll rate me, using the stars or the ratings request on your screen, (that's the only way we get credit for the work here) based on thoroughness and accuracy, rather than any good news/bad news content ... But if there's something you don't understand, or if you have other questions about this, please let me know....

...

Thank you,

Lane

..

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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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