Are federal Thrift Savings Plan distributions taxable?

Forum|Forum|1 year ago
August 23, 2024
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June 22, 2022 Bloomberg article states:
The Missouri Department of Revenue (DOR) June 17 determined in a letter ruling that withdrawals made in retirement from the Thrift Savings Plan (TSP) were “retirement benefits received from sources other than privately funded sources” for individual income tax purposes. Taxpayer, a retired federal government employee, had a pension and a TSP. The TSP was funded by both employee contributions and agency-matching employer contributions. Taxpayer inquired whether withdrawals made in retirement from the TSP counted as “retirement benefits received from sources other than privately funded sources” under the state law. The DOR determined: 1) the benefits paid to Taxpayer from ...

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From MO resident income taxes.?

Apparently not taxable by MO.....BUT that is Subject to whatever AGI limitations there were for 2023 taxes, as the ruling was made in 2022.....or.....unless the MO legislature clarified the issue in later legislation. possibly removing TSP $$ from the exemption.

Full text is here :

Missouri Department of Revenue (mo.gov)

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Note that the ruling also describes some $$ moved into an IRA , and back into the TSP from the IRA...and those IRA $$ apparently lose the TSP exemption...even if back in the TSP. (Sounds like a future proportional calculation nightmare)

But that's just my reading...again, I have no idea if the MO legislature re-defined the situation for TSPs before 2023 taxes started up. Ask the MO dept of revenue..

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*