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Ask the Expert: Does New York State tax Roth IRA withdrawals?

I've had a Roth individual retirement account since 2009, and I'm in my 70s. I took a distribution for the full amount last month. I know there's no federal tax on the interest income, but what about New York State taxes on the interest?

You won't owe any federal or state taxes on that distribution.

Here’s a quick recap of the rules:

You can withdraw a Roth IRA contribution anytime without incurring a tax or a penalty, even the day after making it, because it’s already taxed. But with a few exceptions, Roth IRA earnings are subject to taxes and a 10 percent early withdrawal penalty until you've owned the account for five years and you're older than 59½. (The exceptions: You can withdraw up to $10,000 penalty-free to buy your first home or pay for qualified higher education expenses, or due to death or disability.)

The five-year calendar starts on Jan. 1 of the year of your first Roth IRA contribution, and applies to any Roth IRA accounts you open later. For example, if you opened your first Roth IRA on March 12, 2009, and you opened a second Roth IRA in December 2011, the five years would end for both accounts on Jan. 1, 2014.

But be aware that different withdrawal rules apply when you convert a traditional IRA into a Roth IRA. You can withdraw the amount you converted tax-free right away, since you paid taxes on that money when you did the conversion. But if you were younger than 59½ when you did the conversion, the Roth IRA's earnings are subject to a 10 percent early withdrawal penalty if they're distributed within five years of the conversion date.

The bottom line

There's no federal or state tax on qualified Roth IRA withdrawals.

More information

irs.gov/retirement-plans/roth-iras

irs.gov/publications/p590b

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