Is RMD taxable in NY?
Yes — in most cases. In the case of withdrawing a required minimum distribution from a tax-deferred retirement account, New York treats that money as taxable income.
Why does New York tax an RMD?
New York uses the federal adjusted gross income as the base. The number flows right onto the state return as the IRS lists RMDs as ordinary income. Taxpayers pay tax on it unless a specific state subtraction applies.
Can New York lower the amount of the state return?
Sometimes. Taxpayers may satisfy qualification for the pension and annuity income exclusion. In order to get this benefit, you must be age 59½ or older for the entire tax year & the income must be "qualified." This subtraction lowers the New York taxable income — even though the federal tax bill remains unchanged.
Which accounts usually generate RMD income?
These rules apply mainly to tax-deferred accounts as exemplified below:
- Traditional IRAs — plus SEP and SIMPLE IRAs
- Employer plans like 401(k) & 403(b)
- Many governmental 457(b) plans
When is the first RMD due?
For IRAs, you should take the first withdrawal by April 1 of the year after turning 73. For all following years, the deadline is December 31. Specific workplace plans allow you to wait until you retire, yet you need to check the plan rules.
How can you prevent a bigger New York tax bill?
The calendar year for the income should be planned carefully. If you wait until April 1 to take the first RMD, you will have to take a 2nd one by December 31 of that same year. 2 distributions in 1 year push the income up — which could result in a higher tax bill.
What if you miss an RMD deadline?
The IRS charges an excise tax on the amount you failed to withdraw — generally 25%. This rate may be lower in the case of fixing the mistake quickly & filing the correct form. New York does not charge this specific federal penalty payment. Yet the late withdrawal will still show up as income on the state return when you finally take it.
Contact Dimov NYC CPA for RMDs
If you need a solution that satisfies your residency situation & exact accounts, reach out to Dimov NYC CPA. Our team can confirm deadlines, apply the right New York subtraction and set up withholding parallel to your filing plan.
