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I have a client that has a distribution from a 403 b plan

I have a client that...
I have a client that has a distribution from a 403 b plan in NYS.

Is that distribution taxable on the NYS it 201 tax return
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Answered in 3 minutes by:
4/7/2012
Charles Markham
Charles Markham, EA, MST, USTCP
Category: Tax
Satisfied Customers: 769
Experience: IRS Enrolled Agent, US Tax Court Practitioner
Verified

TaxWhisperer :

Yes, it's taxable. It's the 414(h) plans (state and local) you are thinking of where it might not be taxable. Please note NY has a $20,000 pension exclusion if you are over 59 when you receive a pension. The first $20K is tax free.

Customer:

She also received her NYS pension, which is all excludable. Is there an additional $20,000 excluded or not

Customer:

she is a NYC teacher

TaxWhisperer :

Are you "here" in chat?

Customer:

yes

TaxWhisperer :

Okay. The $20,000 exclusion is in ADDITION to the general tax free nature of the teacher's pension.

Customer:

so she gets 2 different kinds of exclusions

TaxWhisperer :

There should be code in your software where you flag the 403B as being eligible for the exclusion. It's not something you should have to do manually.

Customer:

ok thanks

TaxWhisperer :

Yes, two different exclusions.

TaxWhisperer :

NP

Customer:

thanks so much

Customer:

is the 403 b considered an annuity is that why its addition

TaxWhisperer :

The 403B is just a pension like an IRA or a 401K. The fact that it's an annuity is beside the point, really.

TaxWhisperer :

Do you need anything else?

Customer:

ok thanks

Charles Markham
Charles Markham, EA, MST, USTCP
Category: Tax
Satisfied Customers: 769
Experience: IRS Enrolled Agent, US Tax Court Practitioner
Verified
Charles Markham and 87 other Tax Specialists are ready to help you
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Customer reply replied 5 years ago

is there any refernce to the tax law.

 

I couldnt find any mention of the exclusion on the NYS website.

 

Do all taxpayers get 2 exclusions if they have a pension and 403 b

There are two different code sections. 612(c)(3)(i) excludes the teachers pension.

612(c)(3-a) is the $20,000 exclusion.

 

Please start a new post for follow up questions. Thanks.

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Customer reply replied 5 years ago
is it age dependent for a teacher ie 59 years old? or does the exemption apply regardless of age for those in the educational field

The $20,000 exemption ONLY applies to those over 59 1/2.

The teacher applies regardless of age.

Charles
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Customer reply replied 5 years ago

her birth date is 11/26/51 do I calculate 7/12th's of $20,000 as an exemption

No, but the $20,000 limit starts the date she turned 59 1/2.

That is, if you waited till 59 1/2 to take $20K out, she gets the full $20,000 NY exemption.

Would you PLEASE click Accept on these follow on question?
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Customer reply replied 5 years ago
Sorry litt;e confusd I have to ask when she got the distrubution.< if she received it before turning 59 1/2 all would be taxed on NYS? If she got it in monthly increments then how do I calculate how much if any is exempt
Customer reply replied 5 years ago
See above question
Customer reply replied 5 years ago
What if she got the payments monthly after she reached 59 1/2. Do I just use those payments subject to $20,000 exemption as the deduction on her NYS return
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Charles Markham
Charles Markham
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