N.Y.S. Enhanced STAR and 401k
In 2006, I took a required minimum distribution from both my 401k and my IRA, separately as required. To maintain the New York State Enhanced S.T.A.R. school tax relief exemption, combined 2006 income, minus IRA RMDs, should not exceed $70,650. Do you know if 401k RMDs can also count in that calculation? If not, that would be another reason to be sure to roll over to an IRA before 70 1/2.
Permalink Submitted by Alan Spross on Wed, 2007-12-05 03:52
From the info I pulled up on the web, it is clear that the enhanced credit income definition is limited to IRA accounts, so employer plan RMDs cannot be deducted from income. If so, you are correct, this is yet another reason to roll over plans to IRAs prior to RMD age for NY residents.
There is also some information on a new NYS 2007 Middle Tax credit, but I did not determine how or if this would affect the Enhanced Star program.