Thursday, February 27, 2020
The TDA Withdrawal is Exempt From State And City Taxes
This post is a reminder that once the educator reaches 55 years of age and retires, all TDA withdrawals are exempt from New York State and City taxes. Just like our regular teacher pension, the retiree only pays Federal taxes. However, if the retiree moves out of State, the retiree would need to pay State and Local taxes for any TDA withdrawals..
For educators under the age of 72 you can leave all your money in the TDA and can keep on appreciating tax deferred, unless you choose to annuitize the TDA. However, if you have reached the age of 72, you must withdrawal at least the percentage that the Required Minimum Distribution mandates. Finally, some people believe there is a $20,000 limit on withdrawals that are exempt from State and City taxes. That only applies to non-public sector pensions and not to our pension or the TDA withdrawals.
Teachers may be underpaid and not appreciated bit we have a good pension and a great TDA when they are exempt from State and City taxes..