Pension and annuity income exclusion
Did you enter an amount on line 9 or 10 that was not from a NYS or local government pension plan or federal government pension plan? If No, go to line 30.
If Yes, and you were 59½ before January 1, 2018, enter the qualifying pension and annuity income included in your 2018 federal AGI, but not more than $20,000. If you became 59½ during 2018, enter only the amount received after you became 59½, but not more than $20,000. If you received pension and annuity income and are married, or received pension and annuity income as a beneficiary, see below.
$20,000 limit – You may not take a pension and annuity income exclusion that exceeds $20,000, regardless of the source(s) of the income.
Qualifying pension and annuity income includes:
• periodic payments for services you performed as an employee before you retired;
• periodic and lump-sum payments from an IRA, but not payments derived from contributions made after you retired;
• periodic distributions from government (IRC section 457) deferred compensation plans;
• periodic distributions from an annuity contract (IRC section 403(b)) purchased by an employer for an employee and the employer is a corporation, community chest, fund, foundation, or public school;
• periodic payments from an HR-10 (Keogh) plan, but not payments derived from contributions made after you retired;
• lump-sum payments from an HR-10 (Keogh) plan, but only if federal Form 4972 is not used. Do not include that part of your payment that was derived from contributions made after you retired;
• periodic distributions of benefits from a cafeteria plan (IRC section 125) or a qualified cash or deferred profit-sharing or stock bonus plan (IRC section 401(k)), but not distributions derived from contributions made after you retired.
Qualifying pension and annuity income does not include:
• Distributions received as a nonemployee spouse in accordance with a court-issued qualified domestic relations order (QDRO) that meets the criteria of IRC section 414(p)(1)(A) or in accordance with a domestic relations order (DRO) issued by a New York court. For additional information, see Publication 36.
• Distributions received as a result of an annuity contract purchased with your own funds from an insurance company or other financial institution. The payments are attributable to premium payments made by you, from your own funds, and are not attributable to personal services performed. For additional information, see Publication 36.
If you both qualify, you and your spouse can each subtract up to $20,000 of your own pension and annuity income. However, you cannot claim any unused part of your spouse’s exclusion.
Example: Chris and Pat, both age 62, included total pension and annuity income of $45,000 in their federal AGI on their joint federal tax return. Chris received qualifying pension and annuity payments totaling $30,000 and Pat received qualifying payments totaling $15,000. They are filing a joint New York State resident personal income tax return. Chris may claim the maximum pension and annuity income exclusion of $20,000, and Pat may claim an exclusion of $15,000, for a total pension and annuity income exclusion of $35,000.
If you received a decedent’s pension and annuity income, you may make this subtraction if the decedent would have been entitled to it, had the decedent continued to live, regardless of your age. If the decedent would have become 59½ during 2019, enter only the amount received after the decedent would have become 59½, but not more than $20,000.
In addition, the pension and annuity income exclusion of the decedent that you are eligible to claim as a beneficiary must first be reduced by the amount subtracted on the decedent’s New York State personal income tax return, if any. The total pension and annuity income exclusion claimed by the decedent and the decedent’s beneficiaries cannot exceed $20,000.
If the decedent has more than one beneficiary, the decedent’s $20,000 pension and annuity income exclusion must be allocated among the beneficiaries. Each beneficiary’s share of the $20,000 exclusion is determined by multiplying $20,000 by a fraction whose numerator is the value of the pensions and annuities inherited by the beneficiary, and whose denominator is the total value inherited by all beneficiaries of the decedent’s pensions and annuities.
Example: A taxpayer received pension and annuity income totaling $6,000 as a beneficiary of a decedent who was 59½ before January 1, 2019. The decedent’s total pension and annuity income was $24,000, shared equally among four beneficiaries. Each beneficiary is entitled to one‑quarter of the decedent’s pension exclusion, or $5,000 ($20,000 divided by 4).
The taxpayer also received a qualifying pension and annuity payment of $14,000 in 2019. The taxpayer is entitled to claim a pension and annuity income exclusion of $19,000 ($14,000 attributable to the taxpayer’s own pension and annuity payment, plus $5,000 received as a beneficiary*).
* The total amount of the taxpayer’s pension and annuity income exclusion that can be applied against the taxpayer’s pension and annuity income received as a beneficiary is limited to the taxpayer’s share of the decedent’s pension and annuity income exclusion.
Disability income exclusion
If you are also claiming the disability income exclusion (Form IT-225, S-124), the total of your pension and annuity income exclusion and disability income exclusion cannot exceed $20,000.