2024 Delaware Pension Exclusion

Forum|Forum|11 months ago
May 1, 2025
1 reply
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Though my financial advisor we did a large Roth Conversion from my wife's Tax Deferred IRA in 2024. Meanwhile, we received a benefit from my Tax Deferred account. Both are reported as income. However, the income from my tax deferred account was permitted to take the $12, 500 pension exclusion however my wife's Roth conversion was not accepted even though it was taxed as income. Are Roth conversions eligible for the Delaware Pension Exclusion if a distribution to the account holder was not made?

RobertB4444

How old is your wife? You have to be 60 or older to get the Delaware pension exclusion.

@rbucking4

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rbucking4Author

My wife is 68 years old. I have received multiple judgements on this. My financial advisor says that the Delaware Pension Exclusion would apply to a Roth conversion because the conversion is taxed as income. A tax advisor here in Delaware tells me the Pension exclusion does not apply to a Roth conversion as there was no distribution to her. The intent is to provide up to $12, 500 of additional state tax relief to seniors for pension / retirement account income. Which is the answer?

HollyP

Employee

No. A ROTH conversion does not qualify. The DE instructions states that, "Eligible retirement income includes dividends, capital gains net of capital losses, interest, net rental income from real property and qualified retirement plans (IRC Sec. 4974), such as IRA, 401(k), Keogh plans, and government deferred compensation plans (IRC Sec. 457)." See page 6 here.

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