02 Jul Will my pension be tax-free?
Q. If my pension is over 100k and was noncontributory, what portion of my pension will be taxable under the Christie gas tax law?
A. If your pension is more than $100,000, you’re not going to get a tax break.
First, noncontributory pension plans do not require that employees make contributions. As such, when distributions are made from these plans, they are includable in income, said Cynthia Fusillo,a certified public accountant with Lassus Wherley in New Providence.
Next let’s turn to the gas tax law you referred to. The law also had a provision to expand the retirement income exclusion for certain taxpayers.
On 2018 returns, taxpayers filing jointly may exclude as much as $60,000 of retirement income, which will increase to $80,000 in 2019 and $100,000 in 2020, Fusillo said.
But your total income must be $100,000 or less to be eligible for the retirement income exclusion, and this $100,000 threshold is a cliff, she said.
“In other words, at $100,000 of gross income you get the exclusion. At $100,001, no dice,” Fusillo said. “So, it sounds like you’re over the cliff and not eligible – consequently all of your pension will be taxable.”
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