403b to IRA ira rollover NY State

[steve650]

I have rolled over retirement money from my optional retirement and supplemental retirement plans as a SUNY professor directly into another account (i.e, the disbursements were directly to another company. ) I have filled in the 1099R information on my federal return in TurboTax and noted they are a direct rollover and not subjected to taxes.  In filling out my NY  tax return, upon review, I get an error notice saying I must enter the Govt. Exclusion amount on the pensions/annuities/IRAs worksheet.  Specifically it asks (see attached screen capture of worksheet"  "If optional retirement program distribution or former government pension converted to an IRA, enter the amount (if any) that qualifies for the government exclusion".  How am I to determine if any qualifies for the government exclusion? I am assuming none?

[CarolC · Accepted solution]

Since you performed a direct rollover of your 403(b) to an IRA, none of your income should be federally or state taxed.  In your federal return, make sure you select New York State and City Education when asked Where is the Distribution From? (when entering 1099-R).  See the screenshot at the bottom left attached.

If your data doesn't automatically transfer to the NY return, then enter the full amount of your rollover as a government exclusion.

The State of New York Department of Taxes and Finance website states:

Your pension income is not taxable in New York State when it is paid by:

• New York State or local government
• the federal government, including Social Security benefits
• certain public authorities

If your pension is taxable to New York and you are over the age of 59 ½ or turn 59 ½ during the tax year, you may qualify for a pension and annuity exclusion of up to $20,000. This exclusion from New York State taxable income applies to pension and annuity income included in your federal adjusted gross income. For more information on the pension exclusions and other benefits for retired people, see Publication 36, General Information for Senior Citizens and Retired Persons.

[Galaxy_Guy]

See also <a rel="nofollow" target="_blank" href="https://www.tax.ny.gov/pdf/memos/income/m02_9i.pdf">https://www.tax.ny.gov/pdf/memos/income/m02_9i.p...>

The withdrawal is not taxable if it is from an IRA or is part of a *periodic* payment from a retirement fund, such as a 457.  A lump sum, one-year withdrawal is taxed fully, no exclusion whatsoever.

The problem is that TurboTax mistakenly applies the exclusion on the NY form!  It assumes, mistakenly, that the withdrawal is part of a periodic payment.  The problem is that it never asks to confirm that!