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401K withdrawal 3Y and move

BostonTom — Fri, 19 Mar 2021 20:24:15 GMT

I was wondering if I did the 401K cares act covid withdrawal and was stretching the taxes over 3 years and then move aver year 1, do years 2+3 get filed under the new state with that income or the old one I received the original full amount in?

Re: 401K withdrawal 3Y and move

AnnetteB6 — Mon, 22 Mar 2021 13:33:15 GMT

The answer to your question will depend on the states that are involved and whether they have conformed to taxing the withdrawal over three years instead of one. Each state may decide to handle this situation differently.

Pay close attention to how the distribution is handled on your 2020 state return. It is possible that the entire amount has already been included in your state income if your state did not agree to tax it over three years.

Rest assured that TurboTax will ask all the necessary questions to make sure things are handled properly on your state returns in years two and three.

Re: 401K withdrawal 3Y and move

BostonTom — Mon, 22 Mar 2021 15:52:57 GMT

It’s Massachusetts and they match the feds by rule and it’s split up in 3 years. So does that mean year 2 and 3 in the new state (which has no state tax) go by that?

Re: 401K withdrawal 3Y and move

DMarkM1 — Tue, 23 Mar 2021 13:32:15 GMT

We don't know for sure at this time, but indications are you will be reporting the new distribution amount (1/3) on your return next year and if you are resident in a new state that state's rules will be in effect.