Question

If I got a disbursement from a 401k, how do I calculate the "Basis of Retirement Income?"

Forum|Forum|4 years ago
February 4, 2022
1 reply
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Turbotax suggests that, since all of my 401k contributions were made in PA and with a PA employer, my "basis" is likely the amount of the disbursement, but when I enter that amount, Turbotax reduces my perceived state tax burden to zero, even though no state tax was withheld at the time of disbursement.

401k is all pre-tax, yes? I should owe *something,* yes?

TurboTax Deluxe Online

J

JulieS

Yes, in most cases your 401(k) is all pre-tax and your basis would be zero. That is how it is on the federal level and in most states.

However, Pennsylvania doesn't allow you to defer tax on your 401(k) when you contribute money, so your basis is the amount you have contributed to the plan, less any distributions you have taken in the past. Any employer matching contributions are not included in your basis.

So, it may be that your basis is the whole amount of your distribution. You may need to contact your plan administrator to get this information if you haven't kept track of your contributions.

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