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You Make the Call - April 4, 2024

Published:
By: NATP Staff

Question: Erek is a retired public safety officer. He separated from service due to disability. He wants to take out $3,000 tax-free from his retirement plan to pay for his Medicare premium. Is he allowed to do so?

Answer: No. If Erek withdrew the funds from his retirement plan to pay for his Medicare, it would be taxable to him.

To begin, who is a retired public safety officer? They are law enforcement officers, firefighters, chaplains or members of a rescue squad or ambulance crew who separated from service as a public safety officer with the employer who maintains the retirement plan for them after reaching the normal retirement age. They could also be an officer who separated from service because of disability.

The IRS says retired public safety officers can reduce their taxable income by excluding up to $3,000 from their retirement plan distribution to pay for qualified insurance premiums like accident or health insurance or long-term care insurance. However, it does not include Medicare, which is under title XVIII of the Social Security Act.

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NATP Staff

The NATP team is dedicated to supporting tax professionals with expert insights, industry updates, and resources that help them serve their clients with confidence.

Information included in this article is accurate as of the publication date. This post does not reflect tax law changes or IRS guidance that may have occurred after the publishing date.