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Retirement tax questions
Massachusetts does not tax ROTH IRA distributions provided certain conditions are met. They follow the Federal standards. However, Massachusetts does not allow a deduction for contributions to a traditional IRA. You will have to keep track of your basis to get an exclusion when you take a distribution. Massachusetts does NOT follow the federal guidelines in this case.
When you go through your MA state return, you will be asked about the same 1099-Rs and will be able to indicate if any of the state exclusions apply. The state information will not update as you go through the federal portion, the changes will be made when you go through the state return.
Excluded from your Massachusetts gross income for the year paid: (you can find this list about halfway down the page-Roth Individual Retirement Accounts (IRA)
- Income you earned on the contributions while in the Roth IRA account
- Distributions from a Roth IRA account made to you are excluded from federal gross income. A distribution is excludable if the IRA is held for 5 years and it meets 1 of the following conditions:
- You were at least 59 and a half years old when it was distributed
- You are disabled
- The distribution is made to a beneficiary or your estate on or after your date of death
- The distribution is paying for a qualified first time homebuyer expense (up to $10,000)
(If a distribution is made before the 5-year holding period expires, or doesn't meet 1 of the 4 above conditions, the distribution is not excluded from Massachusetts gross income. Any earnings on the contributions are included in federal and Massachusetts gross income instead.)
- Distributions from traditional and Roth IRAs to qualified charities. This applies to:
- Distributions made on behalf of taxpayers at least 70 and a half on the distribution date in 2014
- Distributions made up to $100,000 per year
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