OT: Tax question for you CPA's and Accountants.

[GloryDawg]

Do I have to be fully retired for Mississippi not to tax my retirement money? To narrow the question down, can I take money out of my 401K and not have to pay state income tax on it or does that no income tax on retirement only applies to Social Security?

 

[patdog]

Nope. Just old.

 

[stateu1]

Do I have to be fully retired for Mississippi not to tax my retirement money? To narrow the question down, can I take money out of my 401K and not have to pay state income tax on it or does that no income tax on retirement only applies to Social Security?

If you are subject to the federal 10% underage (59.5) penalty, MS taxes it. If not, no MS tax even if you are not retired.

 

[GloryDawg]

Nope. Just old.

I will be 59 1/2 in June. I am wanting to take money out of my 401K to help my son's college. If I understand correctly the only tax will be ordinary federal income tax? I know sounds stupid, but I also have a Define Benefit Plan. That's my retirement. I view the 401K as gravy.

 

[stateu1]

I will be 59 1/2 in June. I am wanting to take money out of my 401K to help my son's college. If I understand correctly the only tax will be ordinary federal income tax? I know sounds stupid, but I also have a Define Benefit Plan. That's my retirement. I view the 401K as gravy.

Correct if you wait until 59 1/2.

 

[patdog]

I will be 59 1/2 in June. I am wanting to take money out of my 401K to help my son's college. If I understand correctly the only tax will be ordinary federal income tax? I know sounds stupid, but I also have a Define Benefit Plan. That's my retirement. I view the 401K as gravy.

Correct. It will be taxable for Federal taxes, but not state. Same for either 401k or defined benefit retirement. Just don't move to Alabama. For some ridiculous reason they tax some retirement income and exempt some. It's a damn mess figuring out what's taxable and what's not.

 

[johnson86-1]

Do I have to be fully retired for Mississippi not to tax my retirement money? To narrow the question down, can I take money out of my 401K and not have to pay state income tax on it or does that no income tax on retirement only applies to Social Security?

Is retirement income taxable?
Generally, retirement income, pensions and annuities are not subject to Mississippi Income tax if the recipient has met the retirement plan requirements. Early distributions are not considered retirement income and may be subject to tax.

Individual Income Tax FAQs | DOR

www.dor.ms.gov

Don't think that answers the question for rule 72(t) distributions, but I think if you are paying a penalty for withdrawal, you can assume you'll pay MS income taxes too.