Federal Employees News Digest

Federal Benefits Q&A

Question: “Do I have to pay state taxes on a TSP withdrawal? I retired and decided to withdraw $35,000 from my TSP account and put the rest into an annuity. So now that I have to file for taxes, I am confused over whether I have to report the $35,000. While contributing to the TSP, I lived in 3 different states.”

Answer: If at the time of withdrawing the $35,000 from your TSP account you are a legal resident of a state that has a state income tax—and which taxes TSP withdrawals—then you owe state income tax on the $35,000. Note that the TSP does not withhold state income taxes as it does federal income taxes. You are responsible for paying the state income taxes due. You are encouraged to find a tax accountant in your state who can advise you on how much of your TSP withdrawal is state income-taxable, and on the best way to pay any taxes due.

Reader comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above


Edward A. Zurndorfer Certified Financial Planner
Mike Causey Columnist
Tom Fox VP for Leadership and Innovation, Partnership for Public Service
Mathew B. Tully Legal Analyst

Free E-Newsletter


I agree to this site's Privacy Policy.

Stay Connected

Latest Forum Posts

Ask the Expert

Have a question regarding your federal employee benefits or retirement?

Submit a question