Employee contributions made to the District of Columbia Police Officers and Firefighter’s Retirement Plan (the Plan) by police officers are on a post-tax basis. Because these contributions are made after tax, police officers qualify to receive tax exclusion on the annuity payment they receive from the Plan as calculated under the IRS Simplified Method. This tax exclusion recognizes that police officers previously paid taxes on their contributions and avoids their being taxed twice. This does not mean that the entire annuity payment is non-taxable. The tax exclusion identifies the portion of the total value of the annuitant that reflects taxed contributions and excludes that percentage from future taxation. To determine the amount of the tax exclusion, please refer to IRS Publication 575 Pension and Annuity Income or consult with a tax advisor.
Please note: Annuity payments from the Plan to police officers who retire under 100% disability due to performance in the line of duty are entirely non-taxable. Please refer to the IRS Revenue Ruling 85-104 (1985) below.