You are subject to fines and penalties for not paying Massachusetts tax on payments or withdrawals from a Federal Thrift Savings Plan (TSP)
Go to: https://www.mass.gov/service-details/view-government-pensions#Thrift
Federal employee Thrift Savings Plan (TSP)
The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer. This plan is similar to private sector 401(k) plans. You can defer tax on part of your wages by contributing it to your accounts in the plan.
As an employee:
- Contributions made by an employer to a thrift savings plan are excluded from your gross income in the year contributed. See the "Current year exclusion amounts" table below for elective deferrals, including "catch-up" provisions.
- Income earned on the contributions while in the thrift savings plan account is excluded from gross income.
- Distributions made to the retiree from the plan are fully taxable in the year paid.
See Mass. Gov Website https://www.mass.gov/service-details/view-tax-treatment-of-retirement-plan-contributions-and-distrib...
Retirement plan Contribution to plan MA vs. federal wages when contributing Income from retirement plan
