It depends. Taxation of pension-plan distributions and individual retirement accounts (IRA) in New York State and New York City is complicated. Full taxation applies when the recipient is a resident of New York at the time of distribution. However, the first $20,000 of annual distribution is exempted if the IRA or pension is received by a person 59.5 or older. This is separate from early retirement and working less than 15 years, which is a NYC law, not Federal. Exclusion of $20,000 is applicable to regular payments connected with personal service performed before retirement and to lump-sum payments from IRAs and qualified self-employed plans. The exclusion can be availed of by beneficiaries. As for distributions to nonresidents, taxation is applicable to services performed in New York. A $20,000 exemption if the distribution is received when 59.5 or older. Distribution is not taxable if it can be treated as an employer-provided annuity.
Publication 36, General Information for Senior Citizens and Retired Persons.
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