It does vary from among the states. Rescueme is in PA. PA does not give you a deduction for 401k or IRA contributions at all. And withdrawals from 401k or IRAs or not taxable if taken after normal retirement age (coded as 7 or 4 on a federal 1099-R). If early withdrawal, PA will tax that part of the withdrawal that exceeds your cost in the retirement plan.
Exactly.
Additionaly, any gains from the point of contribution (when taxes are paid) are tax free (assuming you are retired) for state/local purposes.
Since our contributions were taxed at the time of contribution (since 1982) we have a lot of gains that are not taxed by our state/local government. Of course, FIT will be paid as we withdraw. Even that (with a mixture of non-deductable IRA's, such as the 11 year period of 1987-97, along with Roth IRA's) keeps our total FIT low.
Also, when DW starts her two (small) pensions in six months, along with SS a year after that, no state/local taxes are due. It's the same for me, concerning SS. I'll be claiming 50% of DW's SS when she files, for 3.5 years until I turn 70 and then claim my own. No state/local taxes due.
Additionally, our joint lifetime SPIA (purchased when we retired, after the age of 59.5) is also free of state/local taxes. It was purchased with part of tax-deferred funds I received from my former company from their cash balance retirement plan after I retired. Of course, I do pay FIT on the annual distribution, but nothing on the state/local side.
PA treats retires well tax-wise, IMHO.