What has changed regarding first responder pension payments?

Disability payments to first responders from retirement plans after reaching retirement age will now be excluded from income for tax purposes.

Currently, a retiree's disability benefit that is excluded from income under Code Section 104(a) loses its tax exemption at normal retirement age if the disability benefit converts to a normal retirement benefit. SECURE 2.0 establishes that in 2027, for first responders, the service-connected disability benefit under a pension or annuity retains its tax-exemption even if the benefit converts to a normal retirement benefit.