Are 401(k) contributions earned in DE taxable in PA?

[AnthonyC]

Yes, Pennsylvania is one of the few states that does not follow the federal rules on 401(k) contributions.  PA does NOT exclude 401(k) contributions from a taxpayers income - thus, making contributions taxable.  This applies even if you are a PA resident working in DE - you will have to add back any contributions to a 401(k) for PA return purposes (if your payroll company hasn't already done this for you).   

https://revenue-pa.custhelp.com/app/answers/detail/a_id/273/~/are-my-contributions-to-a-401%28k%29-p...

[laroche73]

So what happens to your 401(k) withdrawals after age 59 1/2 if you move to another state, say for retirement? The withdrawals would have been exempt from state tax in Pennsylvania, but would they be subject to state taxes (aside from states that have no income tax) upon withdrawal when living in another state? Seems like that would be a case of double taxation at the state levels. I am not aware of any other state that taxes 401(k)/403(b)/etc. contributions up front like PA does (NJ does tax regular IRA contributions but not 401(k) contributions).

Conversely, if someone retires to PA, IL, or MS from a high tax state, it seems that would be largely equivalent to moving to a no income tax state (assuming 401(k) distributions make up the bulk of your retirement income), since retirement distributions from qualified tax-deferred retirement plans are not taxed in those states.

[TomD8]

By federal law, retirement income is taxable by your state of residence at the time you receive it.

[gmott18]

Does that apply the same to employer 401K matches? I thought that was not taxed in PA.