Plan other than Employer Provided Retirement Plan

If a taxpayer receives distributions from a plan that is not an employer provided plan, such as an Individual Retirement Arrangement (IRA), the department will consider the distributions exempt retirement income so long as the taxpayer is not required to pay a penalty for early withdrawal. For example, if a taxpayer received a distribution from an IRA after retirement, death, disability, separation from service unforeseeable emergency or attaining the age of 59½ and a penalty is not paid, the distribution is not included in the taxpayer’s compensation.

For additional information regarding IRAs, refer to Personal Income Tax Bulletin 2008-01 [PDF] .