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PA 1099-R Cost Recovery Method

gstocker
Level 1

In 2019 and prior, we were able to show PA Cost Recovery Method for 1099-R distributions on the PA Schedule W-2S, Section II. In 2020, the schedule no longer exists and there isn't a place for me to show the total federal amount, the adjusted plan basis, PA compensation, and PA tax withheld on the new statement. It should show up on the new PA Statement 4; however, when the taxable amount is $0 (full cost recovery), the Schedule isn't even populating. When it does populate for a smaller taxable amount, the PA adjusted basis doesn't flow through to the statement. If I don't report the federal amount and PA adjusted basis, my clients will receive letters from PA. I need ProConnect Tax software to solve this problem before I can e-file.

4 Comments 4
stockere
Level 1

I am having this same problem. Has anyone found a solution? I was on the phone with support today for 2 hours and she was unable to solve the problem, and directed me here.

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Accountant-Man
Level 12

I thought PA doesn't tax pensions.

** I'm still a champion... of the world! Even without The Lounge.
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gstocker
Level 1

PA pension and 401(k) contributions are made with post-tax dollars, so when a regular distribution is made, it is not taxable. However, when an early distribution is made it is taxable; therefore the need for the cost recovery method to avoid double taxation.

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slatronica
Level 1

Can you share how you are able to add basis for PA in 2019 and earlier. I don't see a way

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