NY State Retirees with 403b and public pensions
NY residents are exempt from State Income Tax on public pensions and 403b's (teachers, civil servants, etc).
How do we remove the state income tax ESP automatically calculates (and which then impacts std of living)?
We've "forced" it by changing state of residence to NH (with 0 state income tax) but that then would also impact any NY State income tax that might be due on other than pension/403b income.
Note: it's also not possible, at least as far I can find, to change the state of residence initially entered without adding a "second state".
Hopefully, I'm missing the obvious and it's only been a couple days but so far, impressed with ESP overall.
The NY Income tax issue is not a "minor" one as it affects thousands of NY residents.
One small additional question.
When comparing the results of MMSS (which recommends Spouse 1 filing at S2 FRA in order for S2 to collect spousal and defer to 70), with ESP which suggests both deferring until 70 (based on maximized joint living standard).
Is this to be expected and simply the "choice" one must make?
TIA for your continued help/advice.
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Comments
dan royer
Wed, 04/06/2016 - 21:44
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We don't have a way for the
We don't have a way for the program to tax at the Federal level and not the State level. You can calculate the amount of tax you are being overcharged and give it to yourself as a series of non-taxable special receipts. The program is aware I believe that some pensions in some states are not taxed, but this is not so with the 403b.
I believe you can change the state in the Family area of the profile, but that does not seem like the correct way to handle the issue you are describing.
It's harder for me to answer the question about SS. MMSS is of course accurate with regard to the highest present value of your SS benefit. One would think that this strategy would also yield the highest discretionary spending levels when implemented in ESPlanner. However, it could be that once the benefit collection strategy is contextualized within the personal economy in ESPlanner, that tax consequences or other factors come into play that make some other benefit collection strategy yield a higher discretionary spending pattern. You want to choose the strategy that yields the highest discretionary spending. If you are borrowing constrained (discretionary spending jumps or stair steps at some point) then comparison is more difficult.
I hope that helps some!
deansdad
Thu, 04/07/2016 - 12:15
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Dan
Dan
Thanks for the quick and comprehensive reply.
After spending some time reading back posts I was pretty sure the NY public employee situation would be as you have described but held out hope that I was just missing something.
I do realize that you guys have to address issues of this type in the order in which they affect the greatest number of end users but I would like to register my "wish list" request that it get addressed at some point since it does directly affect many.
As far as changing the state of residence vs the "special" receipts, I wasn't aware of the non-taxable receipt option so I'll try that solution. My concern was that both changing the residence state and the special option would create a vicious circle inside EPS, hopefully the non-taxable option will eliminate that.
On the MMSS issue, your explanation makes sense and yes there is some stair-stepping in the gap years (67-70). It's mostly the result of us having already retired (at 64 & 63) and basing that decision on the spousal benefit available at the time.
While we're not entirely stripped of it (having missed the grandfathering by 3 months) what's left is a significant reduction from what we had banked on. (Due to the fact that the younger spouse has the higher SS FRA).
That'll teach us to trust commitments
Thanks again for the help.