State Question

[S T]

401K distribution
T/p changed residency from Calif to Hawaii mid year 2009
Received a 401K distribution after change of residency

Taxable to where earned in California or where received in Hawaii?
401K administrator of plan issued 1099R with CA withholding, even though not a California resident at time of distribution.

Thanks

Sandy

[veritas]

Page CA-11

In TTB All States edition

California does not impose tax on retirement income attributable to services performed in California received by a nonresident after December 31, 1995.

[S T]

Retirement

Thank Veritas, I knew about the actual retirement and relocating to another state.

just being " Miss doubting thomas here" as she terminated her California job and changed residency to Hawaii in 2009 , then took a premature distribution of her 401K funds that were earned and accumulated in Calfiornia. The 1099R shows Ca State and Ca state withholding.

Sandy

[ChEAr$]

Thank Veritas, I knew about the actual retirement and relocating to another state.

just being " Miss doubting thomas here" as she terminated her California job and changed residency to Hawaii in 2009 , then took a premature distribution of her 401K funds that were earned and accumulated in Calfiornia. The 1099R shows Ca State and Ca state withholding.

Sandy

I suspect your real problem will be convincing CA of your client's right to a refund.
They will of course assume that just because there is CA withholding, the income
must have CA situs.

[S T]

Issues

Yes, that is partially my issue California wanting to tax her on that Distribution.

However, the t/p did have the funds direct deposited into the Hawaii Bank Account and it was 3 months after she terminated her Calif Residency. Pension Administrator has all of the info on file for the change of address, etc.

Now I also find out that the Box 7 - coded a 1, and I can use an exception as she employment was terminated and was separated from service after she turned age 55.

Wish she would have waited for the new 2010 Calendar Year - then I wouldn't be concerned so much about Calif

Sandy

[Gretel]

I suspect your real problem will be convincing CA of your client's right to a refund.
They will of course assume that just because there is CA withholding, the income
must have CA situs.

Just the fact that CA withholding is on 1099 doesn't mean CA will blink an eye. I have a client, MT resident who receives CA pension since long years with CA withholding. He refuses to change CA withholding and pays me every year for 2 state returns. Never heard anything from CA.

I am aware that having to file a resident return will make things different. But if he clearly lived in Hawai when receiving funds I don't see any grounds for CA to get taxes.