Qualifying IRA Distribution

Forum|Forum|3 years ago
March 17, 2023
7 replies
95 views

Confused. Am 69. In 2022, I withdrew a sum from my 401k plan, a one time withdrawal, and it is entered in TurboTax as a taxable withdrawal. On form 1040, line 4b, that full amount is listed.

For Colorado, TurboTax asks me what is my "Qualifying IRA distribution", with a default value already in the cell as "0". Per the TurboTax fact sheet I pull up, a qualifying pension and annuity income includes "certain IRA distributions reported on line 4b of the federal return."

As this was a one time withdrawal (I did one last year as well), came from a 401k plan (pension?), and not an annuity, do I enter the entire amount in Turbotax as a Qualifying IRA distribution (the amount on the Fed form 1040 line 4b)?

FYI, for Colorado, part of my SS is also considered for an exclusion from state taxes, already calculated by TurboTax.

Thx

TurboTax Home & Biz Windows

Best answer by MarilynG

You may be able to also exclude your pension income in Colorado.

Taxpayers who are 65 years of age or older as of the last day of the tax year can subtract the smaller of $24,000 or the taxable pension/annuity income included in federal taxable income.
- Note: For taxpayers aged 65 or older, there is an exception to this limitation for tax years 2022 and later. If the taxpayer's social security benefits included in their federal taxable income exceed $24,000, they can subtract the full amount of those social security benefits on their Colorado return. For tax year 2022 there are separate lines on form DR 0104AD specifically for the subtraction of social security benefits.

Qualifying taxpayers may claim the subtraction for social security benefits, pensions, or annutities on lines 3-6 of the 2022 Subtractions from Income Schedule (DR 0104AD).

Click this link for more info for Colorado Retirees.

@WDM67

DoninGA

Level 15

If the amount withdrawn and the taxable amount is on Lines 4a and 4b then when you were completing the Form 1099-R you selected the IRA/SEP/SIMPLE box. That is not correct if the withdrawal was from a 401(k) account. Go back to the 1099-R entry screen and uncheck the box for an IRA and go through all the screens to complete that part of the interview.

WDM67Author

Level 4

Thank you for the quick reply!

Am looking at the (not yet submitted) form 1040. Box 4a is blank, Box 4b has my withdrawal amount.

Looking at the 1099-R form, the IRA/SEP/SIMPLE box is (X), so I assume that means it is checked. Also "Taxable amount is not determined" is checked, and "State distribution" is the withdrawal amount.

I assume that my company's account is a 401k, but maybe I am wrong on that. I do have a separate IRA. Will check that now.

I was thinking that since it was not an automatic withdrawal (like a regular pension amount), it would not be a qualified amount.

WDM67Author

Level 4

FYI, I am looking at the fund name where I withdrew the money from, and it is "XXXXX 401(K) Savings Plan." It is the plan that the company I used to work for used for our contributions and their % match contributions.

MarilynGAnswer

Level 15

You may be able to also exclude your pension income in Colorado.

Taxpayers who are 65 years of age or older as of the last day of the tax year can subtract the smaller of $24,000 or the taxable pension/annuity income included in federal taxable income.
- Note: For taxpayers aged 65 or older, there is an exception to this limitation for tax years 2022 and later. If the taxpayer's social security benefits included in their federal taxable income exceed $24,000, they can subtract the full amount of those social security benefits on their Colorado return. For tax year 2022 there are separate lines on form DR 0104AD specifically for the subtraction of social security benefits.

Qualifying taxpayers may claim the subtraction for social security benefits, pensions, or annutities on lines 3-6 of the 2022 Subtractions from Income Schedule (DR 0104AD).

Click this link for more info for Colorado Retirees.

@WDM67

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WDM67Author

Level 4

Marilyn,

THANK you for this explanation and links to the Colorado document explaining this. This is something I was completely unfamiliar with, and provides me with a slightly larger return from Colorado.

@MarilynG