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IRA and 401(k) distributions in retirement: Taxed in Alabama
Even though traditional pension benefits aren't subject to tax in Alabama, amounts paid through IRAs and employer-sponsored defined-contribution retirement plans such as 401(k) plan accounts are included in taxable income for Alabama income tax purposes. Alabama does recognize Roth IRA and Roth 401(k) plan distributions as tax-free, matching the federal treatment of these retirement accounts. (For more on IRAs and how they work, head on over to our IRA Center.)
https://www.fool.com/knowledge-center/alabama-tax-laws-for-retirement-social-security.aspx
Dont think information above is correct, i know of people getting this exemption for years (articles on turbo tax and state of alabama)(PPA, P.L. 109-280). As long as you dont comingle your lump sum pension, the principle amount is Alabama state tax exempt, any gains are eligible for state tax. (formula on partial pension distributions worksheet)
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