Updated October 24, 2026. Quick answer: Tax Topic 410 is the IRS page on pensions and annuities. It says all or some of the payments from a qualified employer retirement plan may be taxable, that payments before age 59½ may carry an additional 10% tax, and that withholding is generally figured the same way as for wages.
Quick reference
| Item | What the IRS topic says |
|---|---|
| Taxable or not | “all or some portion of the amounts you receive may be taxable unless the payment is a qualified distribution from a designated Roth account.” |
| Partly taxable payments | “If you contributed after-tax dollars to your pension or annuity, your pension payments are partially taxable.” |
| Early distributions | “If you receive pension or annuity payments before age 59½, you may be subject to an additional 10% tax on early distributions, unless the distribution qualifies for an exception.” |
| Withholding form | “provide the payer Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments” |
| Rollover withholding | “If you receive an eligible rollover distribution, the payer must withhold 20% of the taxable amount of it, even if you intend to roll it over later.” |
Fully and partly taxable payments
The topic opens with the basic rule. The IRS topic says “If you receive retirement benefits in the form of pension or annuity payments from a qualified employer retirement plan, all or some portion of the amounts you receive may be taxable unless the payment is a qualified distribution from a designated Roth account.” It sets one subject aside: “This topic doesn’t cover the taxation of Social Security and equivalent railroad retirement benefits.”
Payments are fully taxable in some cases. The topic says “The pension or annuity payments that you receive are fully taxable if you have no investment in the contract (sometimes referred to as “cost” or “basis”) due to any of the following situations:” For payments with after-tax money, it says “You won’t pay tax on the part of the payment that represents a return of the after-tax amount you paid.” It adds “Taxpayers figure the tax on partly taxable pensions by using either the general rule or the simplified method.” Topic no. 411 covers both methods. See 1099-R box 2a for the taxable amount on the form.
The additional 10% tax
On early payments, the topic says “If you receive pension or annuity payments before age 59½, you may be subject to an additional 10% tax on early distributions, unless the distribution qualifies for an exception.”
It lists some exceptions, including “Distributions made because you’re totally and permanently disabled.” and “Distributions made on or after the death of the plan participant or contract holder.” For the rest it says “For other exceptions to the additional 10% tax, refer to Publication 575, Pension and Annuity Income and Instructions for Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.” Our Form 5329 explained page covers that form.
Withholding and rollovers
The topic says “The taxable part of your pension or annuity payments is generally subject to federal income tax withholding.” On the form for adjusting it, the topic says “provide the payer Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments”. See Form W-4P.
If no form is given, the topic says “the payer must withhold tax as if your filing status is single with no adjustments in Steps 2 through 4.”
For lump sums and rollovers, the topic says “If you receive an eligible rollover distribution, the payer must withhold 20% of the taxable amount of it, even if you intend to roll it over later.” It follows with “You can avoid this withholding by choosing the direct rollover option.” Our page on 20 percent withholding on a pension lump sum covers the same point. The topic also says “you may also need to make estimated tax payments” if withholding falls short.
Where this comes from
This page describes the IRS page titled Topic no. 410, Pensions and annuities, as served on irs.gov on October 24, 2026. The IRS page shows that it was last reviewed or updated on 16 Oct 2026. The IRS can change a topic after we read it, and the IRS page controls. General information, not tax or legal advice.
Common mistakes
- Assuming every pension payment is fully taxable. The topic says payments with after-tax money “are partially taxable”
- Assuming the 10% tax has no exceptions. The topic says it applies “unless the distribution qualifies for an exception”
- Looking here for Social Security rules. The topic says it “doesn’t cover the taxation of Social Security”
- Expecting no withholding on a rollover paid to you. The topic says the payer “must withhold 20% of the taxable amount of it”
- Skipping the form after a withholding change. The topic says to “provide the payer Form W-4P”
Related: IRS tax topics by number, Form W-4P, 1099-R box 2a: taxable amount, Form 5329 explained, 20 percent withholding on a pension lump sum, 1099-R boxes explained, and 1099-R box 4: federal income tax withheld.
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Answer againSources
- IRS, Topic no. 410, Pensions and annuities (irs.gov): https://www.irs.gov/taxtopics/tc410
- IRS, Tax topics index (irs.gov): https://www.irs.gov/taxtopics
Read from the IRS pages linked above on October 24, 2026. General information, not tax or legal advice. The IRS topic page and the instructions for your own form control, and your own facts decide the outcome.