Californian Beats State Tax on $210,000 Roth IRA Disbursement

A California taxpayer avoided income tax on about $210,000 after proving the funds were tax-exempt withdrawals from a Roth IRA account, rather than taxable income from a trust company, a state tribunal announced Monday.

The Trust Company of Oklahoma most likely mislabeled the distributions as taxable on documents, the California Office of Tax Appeals opinion, dated Oct. 6, said. The evidence of TCO’s error included a letter from the company admitting it had incorrectly filled out a Form 1099-R, which is used to report retirement account distributions.

• California’s taxation of Roth IRAs conforms with federal law, which exempts distributions ...