Questions & Answers

Are my employer-sponsored retirement plan distributions taxable?

Generally, your retirement distribution is NOT taxable if it meets two characteristics:

The following kinds of retirement income are also NOT taxable if they come from an eligible employer-sponsored retirement plan:
  • Distributions from an employer-sponsored deferred compensation plan that represent your previous contributions.
  • Payments paid to the estate or designated beneficiary upon an employee's death are not taxable income on the employee's final Pennsylvania return or on the beneficiary's Pennsylvania return
  • All distributions (regardless of the distribution code reported in Form 1099-R, Box 7) from the State Employees' Retirement System, the Pennsylvania School Employees' Retirement System, the Pennsylvania Municipal Employees' Retirement System, and the U.S. Civil Service Commission Retirement Disability Plan
  • Retired or retainer pay of a member or former member of a uniform service computed under Chapter 71 of Title 10, U.S. Code as amended.
All other amounts you receive from your eligible employer-sponsored retirement plan that aren't exempt as explained above are taxable on your Pennsylvania return.

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