Does a withdraw from my 403B that was automatically taxed need to be claimed on state and federal returns?

[borggrebe-jerry]

At 59.5 years of age I am permitted to take withdraws from my 403B, the withdraw has been taxed by policy. Is that considered income which needs to be claimed?

[Holly W]

Hello borggrebe-jerry,

Thank you for joining us today!  

Distributions from your 403(B) plan is considered taxable on the Federal return and considered ordinary income, UNLESS you made your contributions after tax dollars, for an example, like a Roth IRA.  

As for the State, it depends on your state rules.  Each state is allowed to determine how they want to treat Retirement distributions.  Some states tax the whole distribution amount, some not at all.  

These states do not have income tax at all:

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

These states do not tax Retirement income:

• Illinois
• Iowa
• Mississippi
• Pennsylvania

Thanks again for participating today!