Guest RSNOW Posted December 4, 2002 Posted December 4, 2002 Does anyone know if the CA State Withholding requirement on retirement distributions looks to the state the employer is in (CA in this case) or the current residence of the participant receiving a distribution ? In other words, if a participant terminated employment from a CA company and now lives in a state without required State withholding, is state withholding still required on their retirement distribution (assuming no rollover) ?
Guest b2kates Posted December 4, 2002 Posted December 4, 2002 I do not recall the statute, but Congress limited the taxation of distributions to state of residence.-- Cut off the vigilant states like California and New York from chasing retirees that moved to different state.
mbozek Posted December 4, 2002 Posted December 4, 2002 b2 is correct-- for most plans (other than certain non qualified plans) only the state of residence can tax a retiree's pension benefits. If an employee who earned a pension in CA moved to Nev after retirement (Nev has no income tax) CA cannot tax the retirement benefits. mjb
maverick Posted December 5, 2002 Posted December 5, 2002 Although this relates to a lesson I learned the hard way about military retirement, the same "rules" apply here. As soon as you relocate, make sure that you do everything required to become a legal resident (register to vote, driver's license, vehicle registration, etc.). Some of the more aggressive states will make you prove that you are no longer a resident. Just because you moved to Florida doesn't mean that Minnesota won't try to get you to pay MN state income tax.
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