Retirement tax questions

The Kentucky 3-year Recovery rule you're referring to is likely related to the federal provision for qualified disaster recovery distributions? Let me know if that's not what you are referring to.

 

If you took a lump sum payment from a retirement account and it qualifies as a "qualified disaster recovery distribution," you might be eligible to spread the income inclusion over a 3-year period for federal tax purposes. To qualify, the distribution must be related to a federally declared disaster. If it does qualify, you can choose to include the distribution in your gross income ratably over three years, unless you elect otherwise. Additionally, you have the option to repay the distribution to an eligible retirement plan within three years, which can help you avoid taxes on the distribution.

 

For Kentucky state taxes, you would generally follow the federal treatment of such distributions. However, it's important to check if Kentucky has any specific provisions or deviations from the federal rules regarding disaster recovery distributions. If you're unsure whether your distribution qualifies, it might be helpful to review the specific circumstances of your distribution and any related disaster declarations.