Originally Posted by youbet
I think you're still missing my point. Illinois taxes NO retirement income including 401k distributions, IRA withdrawals and Roth conversions, private pensions, etc. There is nothing "unfair" going on in regard to 401k's. Now, whether Illinois can afford to not tax retirement income is a completely different story!
Why yes, yes they do! Again, Illinois does not tax PRIVATE pensions. And, yes, someone from out of state whose retirement income is from pensions, SS and IRA withdrawals can move to Illinois and pay no state income tax. They can also move to hell and not have to worry about a winter heating bill..........
Note: I am not a tax expert. The above is what I believe to be true based on doing my own taxes. Any necessary corrections appreciated.
Probably the simplest explanation, is if a 1099-R is associated with the income, it's exempt. Although, there's probably some sort of retirement income that doesn't get a 1099-R, that I'm not aware of.