New York Tax and Finance Department Issues Opinion on Tax Implications of Thrift Savings Plan Distributions

The New York State Department of Taxation and Finance issued an advisory opinion addressing the tax implications of distributions from a Thrift Savings Plan (TSP) and an Individual Retirement Account (IRA) funded with TSP funds. The Department concluded that distributions from a TSP are not subject to New York State income tax, and distributions from an IRA funded with TSP contributions qualify for the subtraction modification under Tax Law § 612(c)(3)(ii), provided the distribution represents a return of the amount rolled over. However, any gain or income earned from the rollover IRA is not considered attributable to the TSP and ...