State Tax on Pensions After Moving: 4 U.S.C. 114
What federal law protects from your former state, the ten-year deferred compensation rule, and the gaps
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Federal law — 4 U.S.C. section 114 — bars states from taxing the retirement income of someone who isn't a resident or domiciliary. After you move to Florida, your former state can't tax distributions from qualified plans, IRAs, or government pensions, or deferred compensation paid in substantially equal payments over at least ten years or for life.
On this page
What's protected
| Income | Protected? |
|---|---|
| 401(k), 403(b), 457(b), pension plan distributions | Yes |
| Traditional and Roth IRA distributions, SEP and SIMPLE | Yes |
| Government and military pensions | Yes |
| Nonqualified deferred compensation paid in substantially equal periodic payments over 10+ years or for life | Yes |
| Nonqualified excess benefit plan payments received after termination of employment (in any form) | Yes |
| Nonqualified deferred compensation paid in a lump sum or over fewer than 10 years | No — sourced to the state where earned |
| Stock options, RSUs, severance | No — allocated by workdays (the stock options guide) |
Planning before the move
For executives with nonqualified deferred compensation, the payout election (ten-year installments versus lump sum) decides whether the former state can tax it — under section 409A, a later election to delay or change the form of payment can't take effect for 12 months, must generally push the payment back at least five years, and — for payments at a fixed date — must be made at least 12 months before the first scheduled payment, so changes need advance planning.
Florida
Florida has no income tax, so protected retirement income is untaxed at the state level once you're a Florida resident.
Frequently asked questions
Can my old state tax my pension after I move to Florida?
No — federal law bars states from taxing nonresidents' retirement income from qualified plans, IRAs, and pensions.
What about deferred compensation?
Protected only if paid in substantially equal payments over at least ten years or for life (or from an excess benefit plan).
Are stock options protected?
No — they're allocated to the state where the work was performed.
Does this cover IRA withdrawals?
Yes — IRA distributions to a nonresident are protected.
Official sources
Federal law provides: “No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State (as determined under the laws of such State).” — U.S. Government Publishing Office, 4 U.S.C. 114 — Limitation on State income taxation of certain pension income (United States Code, 2024 Edition), https://www.govinfo.gov/content/pkg/USCODE-2024-title4/html/USCODE-2024-title4-chap4-sec114.htm
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk handles retirement income sourcing after a move to Florida and deferred compensation payout planning. See pricing or book a call.
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