New York Tax and Finance Department Issues Opinion on Tax Consequences of IRA Distributions Funded by a Thrift Savings Plan

The New York Department of Taxation and Finance issued an advisory opinion regarding the tax treatment of distributions from an Individual Retirement Account (IRA) funded by a rollover from a Thrift Savings Plan (TSP). The Department concluded that such distributions qualify for the subtraction modification under Tax Law § 612(c)(3)(ii), but only to the extent that the distribution represents a return of the amount rolled over from the TSP. Distributions of any gain or income earned from the rollover IRA, not attributable to the TSP, do not qualify for this subtraction modification. However, these distributions may be eligible for the ...