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Non-qualified annuity

I retired in July 2023; my company provides a pension that I have deferred. However part of this pension is non-qualified, which as I understand is treated as a "lump sum" annuity, paid in 2023 (however I started receiving monthly payments for this annuity of the non-qualified in Nov 2023, after I turned 55). This amount showed up in Box 11 on my W2 from this employer. I paid the FICA  taxes on this lump sump in 2023; however now this amount is being treated as "other income" in my state taxes. Shouldn't I be taxed from the state when I receive this income (eg: just the monthly payments) or is it treated like lump-sum payment like IRS. For additional complexity, we moved from Indiana to Michigan in Sep 2023, so I think if it does need to be considered, this should fall under Michigan taxation not Indiana? Any insights would be greatly appreciated. Thanks!

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1 Reply
maglib
Level 11

Non-qualified annuity

@JYoung3  I'm not sure if this will help you related to states attempting to tax  employer’s Executive Deferred Salary Plan (EDSP) and Deferred Incentive Compensation Plan (DIC) (the “Nonqualified Deferred
Compensation Plans”).  TSB are not law but, can be referred to for making appropriate tax decisions. "We conclude that the distributions from his Nonqualified Deferred Compensation Plans
will not be subject to New York State personal income tax because a federal statute prohibits
states from imposing income taxes on retirement income of an individual who is not a resident or
domiciliary of such state."

https://www.tax.ny.gov/pdf/advisory_opinions/income/a20_12i.pdf

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