---
title: "Separate the taxable and tax-free parts of a pension or annuity"
url: "https://ailawframework.com/practice/superannuation/map-tax-free-and-taxable-components-of-a-lump-sum-or-pension-payment/united-states"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A27-T1-R12-US"
practice_area: "Superannuation"
tier: "yellow"
lawyer_review: "required"
jurisdictions: ["US"]
last_reviewed: "2026-10-22"
---

# Separate the taxable and tax-free parts of a pension or annuity

> List whether the person made after-tax contributions, whether any remain, whether the payment is a qualified Roth distribution, and the annuity starting date. Do not compute the tax.

Canonical page: https://ailawframework.com/practice/superannuation/map-tax-free-and-taxable-components-of-a-lump-sum-or-pension-payment/united-states  
Last reviewed: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Superannuation](https://ailawframework.com/practice/superannuation.md) |
| Human involvement | Yellow: Lawyer and AI draft together |
| How AI is used | List whether the person made after-tax contributions, whether any remain, whether the payment is a qualified Roth distribution, and the annuity starting date. Do not compute the tax. |
| What the lawyer must review | IRS Topic no. 410 says pension or annuity payments from a qualified employer plan are taxable in whole or in part unless the payment is a qualified distribution from a designated Roth account. Payments are fully taxable if the person has no investment in the contract: no after-tax contribution, no after-tax amount withheld from salary, or the after-tax amount was already recovered tax-free. If the person contributed after-tax dollars, the return of that investment is not taxed. The investment includes employer amounts that were taxable when contributed. If the annuity starting date is after 18 November 1996, the simplified method is generally required. Topic no. 411, which explains that method, was not opened, so do not apply a formula. The additional 10 per cent tax is a separate question and is not applied to a part of the distribution that is tax-free. Topic no. 412's special lump-sum options are for a person born before 2 January 1936. Do not use them for anyone else. An eligible rollover paid to the person is subject to 20 per cent withholding of the taxable amount. You decide what is taxable. These are not Australian tax components. |
| Written for | United States |
| Applies to | [Map tax-free and taxable components of a lump-sum or pension payment](https://ailawframework.com/practice/superannuation/map-tax-free-and-taxable-components-of-a-lump-sum-or-pension-payment.md) |

## Checking plan

- What the AI does: List whether the person made after-tax contributions, whether any remain, whether the payment is a qualified Roth distribution, and the annuity starting date. Do not compute the tax.
- Basis: Checked against the linked sources on 22 October 2026. Confirm the current instrument before reliance.

## Notes

- Do not apply the simplified-method formula. Topic no. 411 was not opened.
- Do not use the pre-1936 lump-sum options for a younger person.
- Do not state a dollar amount of tax. None was computed from these pages.

## Sources

- [IRS Topic no. 410, Pensions and annuities](https://www.irs.gov/taxtopics/tc410) (checked 2026-10-22)
- [IRS Topic no. 412, Lump-sum distributions](https://www.irs.gov/taxtopics/tc412) (checked 2026-10-22)
- [ABA Formal Opinion 512, Generative Artificial Intelligence Tools (29 July 2024)](https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/ethics-opinions/aba-formal-opinion-512.pdf) (checked 2026-10-22)

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*