TIAA Transfer Payout Annuity

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Joined: Mon Feb 23, 2015 4:13 pm
Location: Montreal

TIAA Transfer Payout Annuity

Post by formerpatriot »

I am wondering if some readers of this forum are in a similar situation and can share their thoughts.
I worked in the USA for a few years and I had a 401(k) at TIAA.
In 2022 I started the "Transfer Payout Annuity" which is one of the many ways to draw retirement income from the 401(k).
TIAA sent me a form 1042-S. Box 1 of that form says "Income Code 15" which means "Pensions, Annuities, Alimony, and/or Insurance Premium".
I am assuming that on my Canadian tax return I can report this income (converted to Canadian dollars) on line 11500 and I am assuming that it is eligible for pension income splitting. Am I correct?
FormerPatriot in Montreal
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Re: TIAA Transfer Payout Annuity

Post by nelsona »

Yes 401(k) income is eligible for pension-splitting. Keep in mind however, in future, that IRA income is not, if you are thinking about rolling your 401(k) to an IRA.

One thing that you can play with is how much your split, depending on how much deductions you and your spouse have (particularly medical deductions) as the more income put in your spouse's hands, the lower your overall deductions might be. Just something to play with when using software.

Also, most software will also split you 15% tax in proportion to how much pension is split. This can give rise to leaving some US tax on the table. So watch that, and eithe limit the tax transfer to yoru spouse, or keep all of it for yourself.
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