TODAY'S PAPER
Good Evening
Good Evening
LifestyleRetirement

Ask the Expert: How does coronavirus layoff affect IRA distributions?

There's a strong possibility I'll be laid off due to coronavirus in July. I'm currently receiving income from an IRA qualified annuity. This is 401(k) money that I converted to an IRA over 10 years ago. Will it disqualify me from receiving unemployment benefits?

No. An IRA you created with 401(k) money 10 years ago shouldn't affect your unemployment benefit. Your benefit would only be reduced by pension income if your "base period" employer contributed to it.

Your "base period" is the time during which you earned the wages that determine your unemployment benefit. That's the first four of the last five calendar quarters completed before you file your claim. For example, if you file for unemployment between July 1 and Sept. 30 (the third quarter of 2020), your base period is from April 1 of 2019 through March 31 of 2020 (the second, third, and fourth quarters of 2019, and the first quarter of 2020).

More information

nwsdy.li/NYSunemployment

I inherited my dad's IRA in 2018. I took a required distribution in 2019. I know I must pay federal tax on the distribution. Am I required to pay state tax?

Not if you qualify for New York State's Pension and Annuity Income Exclusion. State residents who are at least 59½ years old aren't taxed on up to $20,000 of income from their retirement accounts. That includes income from inherited IRAs, regardless of your age, if the original account owner was over 59½ at death.

The $20,000 Pension and Annuity Income Exclusion doesn't include income from government pensions, which get a different tax break: New York grants an unlimited tax exclusion on income from federal, state and local government pensions.

More information

https://nwsdy.li/NYSretired

The bottom line

When reading financial regulations, it's always sensible to check the fine print.

TO ASK THE EXPERT Send questions to act2@newsday.com. Include your name, address and phone numbers. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own consultants for your specific needs.

More Lifestyle