Should below be reported as other income on Federal tax return only or states tax as well?
A highly compensated employee participating in a discriminatory plan must recognize the difference between the current year ending value of the account and the previously taxed amounts as compensation income each year. As a result, not only is the current year realized income subject to tax, but also any unrealized appreciation in the plan is taxed. The previously taxed amount becomes the employee’s basis in the pension plan; therefore, future distributions are subject to minimal additional tax, if any. These employer-sponsored plans are compensation so all income is reported as ordinary income, regardless of the underlying nature of the investments held in the plan.
Link: https://rsmus.com/insights/services/business-tax/do-i-owe-us-tax-on-my-foreign-pension-plan.html
