Distribution of NYC TRS 403B (TDA)
My wife is a 67 year old retired NYC teacher. She is a receiving a pension and has elected TDA deferral status. Last fall she took a $150,000 distribution from her TDA to help our daughter buy a home. Here is my question, is the $150,000 taxable by NYS.
Permalink Submitted by Alan - IRA critic on Mon, 2016-08-01 15:46
No, it is not taxable for NYS or NYC as a subtraction modification per NYS Pub 36: https://www.tax.ny.gov/pdf/publications/income/pub36.pdf
Permalink Submitted by Ben Meyer on Mon, 2016-08-01 20:36
Line 26 of NYS form IT-201 (2015), “Pensions of NYS and local governments…”.
Permalink Submitted by Marv Stone on Wed, 2018-05-30 20:43
I was told that TRS TDA distributions can be 100% fully subtracted from NYS income just like teacher pensions. However my friend who is a retired teacher was denied the excess over $20,000 by the NYS Department of Taxation and Finance. He received a penalty and had to pay interest as well. The department wrote that “..the pension exclusion claimed on line 26 of your 2013 does not qualify for total exclusion in computing your New York Adjusted Gross Income.” Same for his 2014 return. Apparently they do not consider TDA withdrawals as pensions. Can you help.
Permalink Submitted by Alan - IRA critic on Thu, 2018-05-31 00:43
Permalink Submitted by Marv Stone on Tue, 2018-10-09 04:24
Sorry I sent the incorrect advisory opinion. It was for a NY State retired teacher and not a NY City retired teacher. NYC retired teachers who receive TDA distributions directly from TRS and receive a 1099R from TRS are exempt from any NY State taxes on those withdrawals. The $20,000 threshold does not apply to NYC teachers for withdrawals directly from TRS. It turns out that my friend who received the penalty had rolled over his TDA from the TRS to a private IRA when he retired. His 1099R was from Ameircan Funds not from TRS. The IRA box was checked in his 1099 which alerted NYS tax department. If a rollover is done then only the intial amount rolled over from TRS is exempt. You have to do a chart along with your NYS tax return showing the corresponding percentage of the rollover to the current value. He had no idea that his rollover would cause those problems or that he had to do a chart.Here is the link for the Robert Weitzman advisory showing the NY City laws that exempt 100% of TDA withdrawals from NYS taxes as long as the withdrawals are from TRS:https://www.tax.ny.gov/pdf/advisory_opinions/income/a02_9i.pdf