BackDROP & State Taxes

Does my backdrop withdrawals add to my state pension income which adds to my state taxable income that effects my state tax exemption?

Yes, the BackDROP distribution is considered taxable income for the year in which you receive the payment unless you roll it over to a traditional IRA or another eligible employer plan, such as MO Deferred Comp. A popular reason to roll the lump-sum payment into the deferred compensation plan is that it allows employees to defer taxes on the payment until those assets are distributed in retirement. There is a helpful publication on MO Deferred Comp’s website called Thinking About the BackDROP? 

Any withdrawal after retirement is taxable in the year of the withdrawal.

We suggest you speak to a tax professional or financial advisor for advice specific to your situation. For more information about state taxes, or the Public Pension Exemption, please contact the Missouri Department of Revenue or go to: www.dor.mo.gov/personal/ptc/pension.php.