72T and Income Tax Due

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L1: 72T and Income Tax DueIs state income taxassessed on 72T supplemental payments?
2006-09-17 07:36, By: Jinx, IP: [70.32.79.208]

L2: 72T and Income Tax DueHello Jinx:
It depends on the state. Some states have no income tax; some states provide whole or partial exemption from income on IRA distributions (Illinois) or provide a partial break (Colorado — 1st $20,000 is exempt if you are 55 or older); and the list goes on and on.
Unless a state specifically provides a break or exemption; it is most likely that the state starts with Federal taxable income (which already includes the IRA distribution as income) and then applies state based additions/subtractions to arrive at state based taxable income and tax.
The best way to get the right answer is to go to the state department of revenue website and look at the forms & instructions looking specifically for IRA/Pension exemptions.
TheBadger
wjstecker@wispertel.net

2006-09-17 09:28, By: TheBadger, IP: [72.42.66.105]

L2: 72T and Income Tax DueFor example, PA exempts all retirement plan distributions ( and Social Security Benefits) from PA INCOME TAXES,UNLESS taken before age 55.2006-09-18 15:02, By: dlztaxes, IP: [4.175.9.79]

L2: 72T and Income Tax Duedlztaxes:
When I contacted PA Dept. of Rev., they informed me any withdrawals from a 72T less my contribution would be taxablebefore 59.5 (not 55). Ex: Rollover 401K to IRA after retiring at age 56 would be taxable for any amount over my contribution to the 401K (which was already taxed), but after 59.5 it is no longer taxed.
Also, lump-sum Pension (before 59.5) rolled over to IRA & withdrawn before 59.5 would be taxed at state rate. Since I didn”t make any contributions to the Pension Planany withdrawalsfromthe SEPP account are taxable until age 59.5 per the State.
If this is not so, could you direct me to info regarding –“NO PA TAX age 55 & retired”. I havecontacted them twice regarding this issue — with the same result — would be taxable the the extent the withdrawal exceeds my contribution until 59.5.
I”m not sure about the taxability of a monthly pension before 59.5 since I didn”t take that option.
meb242006-09-19 15:59, By: meb24, IP: [71.230.92.4]

L2: 72T and Income Tax Duemeb24:
I”m not a PA resident, but I can see that whatDLZ is saying makes sense. You have to keep the different types of accounts straight.
DLZ referred to taking money from a “retirement plan” which would include your 401(k)plan, and the age 55 rules would apply. Once you do an IRA Rollover and transfer your 401(k) to an IRA (which is not a “retirement plan” in this sense), then you come under the IRA rules. That”s where the age 59 1/2 rules take over and I”m pretty sure that”s what the PA tax folks are telling you.
Hope this helps.
Jim2006-09-20 08:15, By: Jim, IP: [70.184.2.72]

L2: 72T and Income Tax DueJim:
My response was regarding the 72T, which was the original post from JINX – I was assuming it was set up outside a company pension plan or 401K, but rather from an IRA or annuity & would be tax for PA STATE Tax if you are under 59.5 according to the folks at PA Dept. of Revenue.
I did understand that dlz was referring to Pensions & Soc. Security, but I was trying to clarify that a 72T withdrawal from a SEPP account outside the company pension planmay not qualify for tax-exemption if under the age of 59.5 in state of PA.
BTW, I have a call into them regarding 401K withdrawal before 59.5 & retired – waiting for a response. The issue on Pensions & Soc. Securitybeing tax-free seems to be more clear cut.
meb24
p.s.: Ans from PA Dept. of Revenue — “401K withdrawals are also tax-exempt before 59.5if the retirement is (1) from aplan that is eligible for PA PIT purposes, and (2) you retire after meeting the age conditions of the plan or years of service conditions of the plan. I was not aware that the 401K would be tax-exempt before 59.5, but it”s good to know since I am now retired (3 days) & will be making systemic withdrawals from my 401K.2006-09-20 11:31, By: meb24, IP: [71.230.92.4]