Service Retirement
IRC Section 104 does not permit exclusion from income tax for payments determined by reference to the recipient's age, length of service or prior contributions. Treas. Reg. 1.104-1(b). The Service Retirement Benefit described in Section 411.6(1), Code of Iowa, is expressly determined by reference to length of service and age. As a result, the Service Retirement Benefits are subject to income tax.
A portion of the Service Retirement Benefits may represent the return of the recipient's own contributions to the System and its predecessors and be excludable from taxable income for that reason. Secondly, the information set forth above is not specific tax advice on your particular situation. It is merely general information believed to be accurate which you can provide to your tax advisor for their independent review and confirmation in determining the appropriate tax treatment of your benefits.