Skip to Highlights
Highlights

Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) use of actuarial tables, focusing on: (1) the fairness of those tables in computing taxable pension income; and (2) an alternative income computation method that takes into account occupations and other factors.

Skip to Recommendations

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service 1. The Commissioner of Internal Revenue should revise IRS Publication 575 to clarify when retirees can use the simplified general rule to their advantage. If retirees do know their contributions made before and after July 1986, they should be instructed that the use of the simplified general rule may or may not be to their advantage. The publication should also instruct retirees, whose employers cannot separate the contributions they made, to use the simplified general rule because it is always to their advantage to do so.
Closed - Implemented
IRS has changed wording in instructions for simplified general rule to indicate it is probably beneficial for those who qualify for it to use it. The distinction between those who know and those who do not know employer contributions has not been made.

Full Report