Do I need Form 1099-R Simplified Method Worksheet for disability payment at 71? Code 3 confusion

Thanks for this info! My husband is 67 and gets a disability payment with code 3, but his financial guy told him it should be code 7 because he's past retirement age. Is the financial guy wrong? Also does this mean we've been filing incorrectly for years?

The financial guy might be correct. Once your husband reached the minimum retirement age defined by his specific plan (not necessarily Social Security retirement age), the payments should typically convert from disability payments to regular retirement payments, and the code should change from 3 to 7. If he's 67 and still getting code 3, it could mean the plan administrator hasn't made this transition yet, which is something worth checking on. If you've been reporting code 3 payments as wages on line 1 of your 1040, that's the correct way to report them while they're coded as disability payments. If the code should have changed to 7 but hasn't, you may want to contact the plan administrator to ask about this.

Does this actually work with complicated situations? I've tried other tax software and they always seem to miss the nuances of disability income. My situation involves both disability and a small pension from a previous employer.

I'm skeptical of these AI things. How does it know the specific rules for YOUR pension plan? Every plan has different rules about minimum retirement age and when disability converts to regular pension distributions. Does it ask for that info?

It definitely handles complicated situations well. I had both disability payments and some 401k distributions last year, and it correctly identified how each should be treated. It walked me through the specific questions I needed to answer about my situation, including which portions were taxable and which weren't. As for plan-specific rules, it actually does ask about your plan's minimum retirement age and other details that affect taxation. It's pretty thorough about collecting the right information before giving guidance. What impressed me was that it explained WHY each piece of information mattered rather than just asking for numbers.

How does this actually work? Do they somehow have a special line to the IRS? Seems impossible that anyone could get through faster than calling directly.

Yeah right. I don't believe for a second this works. The IRS phone system is completely broken - I've tried calling 15+ times this year and NEVER got through. No way some service can magically get you an agent when millions of people can't get through.

They don't have a special line to the IRS - they use their technology to continuously call and navigate the phone tree until they get through to an agent. Then when an agent answers, their system connects you directly to that agent. It's basically like having someone call repeatedly for you until they get through. I was super skeptical too. I've tried calling the IRS myself at least 10 times this filing season without success. But with Claimyr, I had an IRS agent on the phone within about 90 minutes. The service just kept trying while I went about my day, then called me when they got through. It's not instant, but it beats wasting your own time on hold or getting disconnected repeatedly.

How do you even find out what your plan's minimum retirement age is? My old employer went out of business and the plan is now managed by some third party administrator who never answers the phone.

You can usually find your plan's minimum retirement age in the Summary Plan Description (SPD) that you should have received when you enrolled in the plan. If you don't have this document, try looking for online account access with the third-party administrator - they often have plan documents available for download. If those options don't work, try sending a certified letter to the administrator specifically requesting the Summary Plan Description and information about the minimum retirement age. By law, they must respond to formal requests for plan documents. Another option is to check if your disability payments changed amount when you reached a certain age - that change often coincides with the minimum retirement age.

This is super helpful! I've been trying to figure out if my payments are fully taxable or not. How do I know if I made "after-tax contributions"? I honestly can't remember from 30 years ago when I was working...

Great question! If you made after-tax contributions, they would have been deducted from your paycheck AFTER income taxes were already taken out (so you paid tax on that money when you earned it). Most employer pension plans only accept pre-tax contributions, but some allow after-tax too. Check old pay stubs if you have them - after-tax pension contributions would be listed separately from regular pre-tax retirement deductions. You can also contact your former employer's HR department or the current plan administrator to ask for your contribution history. They should have records showing the breakdown of pre-tax vs after-tax contributions you made over the years. If you can't find any records and you're not sure, it's safer to assume all contributions were pre-tax (which means 100% of your payments are taxable). Most people never made after-tax contributions to employer plans.