Question

Delaware pension exclusion for Roth Conversion

Forum|Forum|2 years ago
February 28, 2024
1 reply
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Does an amount converted from a traditional IRA to a Roth IRA count toward the $12,500 pension exclusion for DE income tax? (Over 65 y.o., so no problem with early withdrawal penalty or eligibility for the $12.5K exclusion).

Of course, it's taxable for Federal 1040 and for DE state above the $12.5K, but TT seems to think it doesn't count for the exclusion.

DaveF1006

No. this pension is not excluded in Delaware because you did not take a distribution. You merely converted the Traditional IRA amount and placed in a Roth account to be distributed later in your retirement. This is a great tax strategy however in case if income tax amounts are higher in later years.

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