It depends. When you enter the the information in your federal interview, be sure to indicate that this is a qualified plan when it asks what kind of a retirement plan it is. This is the first step.
The second step requires you to do the following.
- Select state in the left pane of your return if using Turbo Tax Online If using the software, select the state tab.
- Once you select Alabama as the state, your information from your federal return will populate in your Alabama State return.
- Now you will navigate through the screens until you arrive at a screen that mentions About Your Retirement Distributions.
- You should see your retirement distribution listed and select edit.
- Next you will see a list of distributions that are qualified to be excluded. If you see your pension listed, there select "yes." One of the options I see is payments from a Defined Benefit Retirement Plan
- The next screen will show that it is excluded as income from your Alabama return.
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