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Assume a NQDC participant works in a state with income taxes and retires to a tax-free state. She has two accounts within her deferred comp plan: a 10-year account, paying her $100k per year beginning in the year after retirement. The second account is a lump-sum account, paying out $50k in the year after retirement. She'll receive all the payments while residing in the no-tax state. My question...is there state income tax liability on the $50k lump sum from the source state? Instead of a lump sum, what if she had a 5-year installment of $50k per year. Would that be treated separately from the 10-year payment stream as well? Asked differently, is the 10-year rule interpreted to mean only specific accounts with at least a 10-year stream (or longer) within an employer's NQDC plan are taxed at the retirement state's income tax rate? Or, is the rule interpreted more broadly. Meaning as long as a combination of accounts within an employers' NQDC plan payout for 10 years or more, then all the payments are exempt from source state income taxation?
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We have a 457(b) plan where we match 10% of an employee's elective deferral. I know that the 457(b) employee contribution is state taxable in PA but what about the 457(b) employer match? The match is 100% vested immediately; we match each pay period Thanks Lexy