It
depends, but you likely
don’t have to worry about your 401-K for your Kentucky return. Kentucky allows an automatic pension
exclusion of 41,110 per spouse (and it’s higher for certain types of
pensions). So, if your 401K is less than
41,110, it will not increase your KY income or tax. Here’s an excerpt from the KY Tax Instruction
Booklet:
Line 11, Pension Income Exclusion—The 2016
exclusion amount is 100 percent of taxable retirement benefits or $41,110,
whichever is less. All pension and retirement income paid under a written
retirement plan (qualified or unqualified) is eligible for exclusion. This
includes pensions, annuities, IRA accounts, 401(k) and similar deferred
compensation plans, income received from converting a regular IRA to a Roth
IRA, death benefits, disability retirement benefits and other similar accounts
or plans.
This exclusion is for each taxpayer and must be computed independently
of your spouse who may be filing on the same return. A taxpayer and spouse must
complete and claim their own exclusion, regardless of filing status. Joint
filers—Combine the separately computed pension exclusion amounts and enter on
Schedule M, Line 11, Column B
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