On July 4 you wrote that the first $20,000 of an individual retirement account distribution is exempt from New York State income tax. Does that include a distribution that’s rolled over to a Roth IRA, sometimes called "a backdoor Roth conversion"?


New Yorkers over 59½ enjoy a state tax exclusion on their first $20,000 of annual income from tax-deferred retirement accounts, regardless of what they do with the money. The distribution is still subject to federal income tax. If you transferred $30,000 from a traditional tax-deferred IRA into a Roth IRA, you'd owe federal tax on the entire $30,000; but you'd only owe New York State tax on $10,000.

The transfer is called a Roth "conversion." A Roth IRA created with a conversion is sometimes called a "backdoor Roth IRA." The reason: You can’t contribute directly to a Roth IRA if you’re single and have income of $140,000 or more, or if you’re married filing jointly and have income of $208,000 or more. But there are no income restrictions on Roth conversions, on how many conversions you can do, or on the dollar amount that can be converted from a traditional IRA to a Roth IRA. (By contrast, the maximum annual direct Roth contribution is $6,000 for people under 50, and $7,000 for people 50 and up.)

All withdrawals from a Roth IRA are tax-free after you're 59½ and have owned the account for at least five years. But if the Roth was created with a conversion that you did when you were younger 59½, you'll owe a 10% early withdrawal penalty on withdrawals taken within five years of the conversion date.

The bottom line

New Yorkers over 59½ owe no state income tax on up to $20,000 a year distributed from a traditional IRA for any reason.

More information



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