Generally, California imposes additional taxes on early distributions with some exceptions.
The California excise tax on early withdrawals is 2.5%, or 6% for distributions made from Savings Incentive Match Plans for Employees (SIMPLE) plans within the first 2 years of participation.
California and federal laws are generally the same for the tax on early distributions except for the rate of tax assessed. California does not conform to all of the federal exceptions to the additional tax on early distributions. The amount of an IRA or Keogh distribution included in income may differ for state and federal tax purposes. Also, California does not have taxes similar to the tax on excess contributions to traditional IRAs, Roth IRAs, Coverdell ESAs, ABLE accounts, Archer MSAs, or tax on excess accumulation in qualified retirement plans.
If it was included in California income, the amount of the early distributions you must include in income for California purposes may differ from the amount reported on your federal return if the amount of contributions you deducted for California was different than the federal amount.
See Instructions for Form FTB 3805P for more information.
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