I moved out of California. Can it still tax my 401(k) and IRA withdrawals?

No, once you’re genuinely no longer a resident or domiciliary of that state. A federal statute, 4 U.S.C. 114, bars every state from taxing the retirement income of an individual who isn’t its resident or domiciliary, and 401(k) trusts, IRAs, SEPs, 403(b) annuities and governmental plans are all named inside its definition. The condition sits in the same sentence: each state applies its own residency and domicile law to decide whether you’re outside it. So the argument is almost never about the plan and almost always about whether you actually left.

Can California or New York still tax my 401(k) after I move away?

No, and neither state makes you argue it. The federal rule, 4 U.S.C. 114(a), is one sentence: “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)” (4 U.S.C. 114(a)). Read the parenthetical, because that’s where the real question lives. The bar itself is federal, and each state still decides under its own law whether you’re one of its residents or domiciliaries.

California states its own position in the same terms: “California does not impose tax on retirement income received by a nonresident after December 31, 1995. For this purpose, retirement income means any income from any of the following” (FTB Publication 1005, 2025). New York cites the statute by name in its nonresident return instructions: “U.S. Code, Title 4, section 114, prohibits states from taxing nonresidents on income they receive from (a) pension plans recognized as qualified under the IRC and (b) certain deferred compensation plans that are nonqualified retirement plans but which meet additional requirements” (NY Form IT-203-I, 2025).

Two details in the statute are worth having. “Income tax” is defined by cross-reference to 4 U.S.C. 110(c) as “any tax levied on, with respect to, or measured by, net income, gross income, or gross receipts”, so the bar isn’t limited to a tax that looks like a standard income tax. And “State” is defined to include “any political subdivision of a State, the District of Columbia, and the possessions of the United States”, which is why a city income tax sits inside the same bar. New York City’s tax reaches city residents, and the residency layers behind that are the subject of the Toronto to New York move.

Which plans count as retirement income under the federal rule?

Nine categories, plus military retired pay added at the end of the subsection. 4 U.S.C. 114(b)(1) names a qualified trust under IRC 401(a), a simplified employee pension, a 403(a) annuity plan, a 403(b) annuity contract, an individual retirement plan, a 457 eligible deferred compensation plan, a governmental plan, a 501(c)(18) trust, and one further category of nonqualified plan that has to meet an extra test. Anything outside the list isn’t protected by this statute, though it may be untaxed by that state for some separate reason.

The plan	Where it sits in 4 U.S.C. 114(b)(1)	The condition on that answer
401(k) and other qualified plans	(A), a qualified trust under IRC 401(a) that is exempt under IRC 501(a)	The statute names the qualified trust, so the plan has to be one; a plan that lost its qualified status is outside subparagraph (A)
Traditional IRA	(E), an individual retirement plan described in IRC 7701(a)(37)	7701(a)(37) covers an individual retirement account under 408(a) and an individual retirement annuity under 408(b), and nothing else
Roth IRA	(E), by way of the same definition	IRC 408A(b) defines a Roth IRA as “an individual retirement plan (as defined in section 7701(a)(37)) which is designated … as a Roth IRA”, and California lists Roth IRA distributions and conversions expressly
SEP	(B), a simplified employee pension defined in IRC 408(k)	Named directly, with no payout condition
403(b)	(D), an annuity contract described in IRC 403(b)	Named directly; a 403(a) annuity plan is separately named at (C)
Governmental and 457 plans	(G) and (F)	457 covers an eligible deferred compensation plan as defined in IRC 457, so an ineligible 457(f) arrangement is tested under (I) instead
A 501(c)(18) trust	(H), the last of the lettered categories	Named directly, with no payout condition; the “or” at the end of (H) is what closes the lettered list before the conditional category at (I)
Nonqualified deferred compensation	(I), a plan described in IRC 3121(v)(2)(C)	In only if the income is substantially equal periodic payments over life or over at least 10 years, or an excess-benefit payment received after termination of employment
Military retired pay	The closing sentence of (b)(1)	Retired or retainer pay of a member or former member of a uniform service computed under chapter 71 of title 10; California adds that this holds “even if the military service was performed in California”
Retired partner payments	(b)(1)(I) parenthetical, with (b)(4)	A written plan providing retirement payments in recognition of prior service, in effect immediately before retirement begins, to a partner retired under the partnership agreement; and the same payout condition as the nonqualified deferred compensation row, because the words “if such income” fall after the closing parenthesis and so govern both alternatives inside (I): substantially equal periodic payments over life or over at least 10 years, or an excess-benefit payment received after termination of employment

Does the 10-year payout rule apply to my 401(k) or IRA?

No, and this is the part that gets misread most often. The substantially-equal-periodic-payments test, and its alternative of a period of not less than 10 years, sits inside subparagraph (I) of 4 U.S.C. 114(b)(1) and governs that subparagraph alone. Subparagraphs (A) through (H), which is where a 401(k), an IRA, a SEP, a 403(b) and a governmental plan all live, carry no payout condition whatsoever. A single lump sum out of a 401(k) is retirement income for this purpose in exactly the way a monthly payment is.

The condition is written into the opening of the subparagraph it applies to: “(I) any plan, program, or arrangement described in section 3121(v)(2)(C) of such Code …, if such income (i) is part of a series of substantially equal periodic payments (not less frequently than annually which may include income described in subparagraphs (A) through (H)) made for (I) the life or life expectancy of the recipient …, or (II) a period of not less than 10 years, or (ii) is a payment received after termination of employment …” (4 U.S.C. 114(b)(1)(I)).

California reads it the same way and formats it so the point is hard to miss. Its list of protected plans attaches “only if” to one bullet and to no other: “A private deferred compensation plan program or arrangement described in IRC Section 3121(v)(2)(C) only if the income is either of the following”, followed by the periodic-payment test and the excess-benefit test (FTB Publication 1005, 2025). Every other bullet in that list, the qualified plan, the IRA, the SEP, the 403(b), carries no such qualifier.

There’s a second thing buried in the parenthetical worth pulling out, because it runs in the taxpayer’s favour. When you’re testing whether a nonqualified arrangement is being paid in substantially equal periodic payments, the series “may include income described in subparagraphs (A) through (H)”, so payments from the qualified plans can be counted as part of the same series. The statute also says outright that adjusting payments “to limit total disbursements under a predetermined formula, or to provide cost of living or similar adjustments” will not cause them to fail the test.

What can my old state still tax after I leave?

Three things, each with a boundary worth knowing. Amounts received while you were still a resident stay taxable there, and only those: 4 U.S.C. 114(a) bars the state from taxing retirement income once you’re neither its resident nor domiciliary. Pay for services performed in the state is sourced there rather than protected, though nonqualified deferred compensation lands inside the federal definition only if it meets one of the two conditions in 4 U.S.C. 114(b)(1)(I). And residency and domicile are both decided under the state’s own law, which is a test you can meet on evidence.

New York states the sourcing limb and its own escape hatch in consecutive sentences. Income not exempt under Title 4 and “based on services performed inside and outside New York State” is reported “to the extent that the services were performed in New York State”, and immediately before that: “A pension or other retirement benefit that is not exempt under Title 4 of the U.S. Code, is exempt if it meets the New York definition of an annuity” (NY Form IT-203-I, 2025). So failing the federal test isn’t the end of the question in New York.

On that status question, California publishes what a change of domicile takes, which is the same list you’d want to evidence anyway. It defines domicile as “the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment”, and says a change requires all of three things: “Abandonment of your prior domicile”, “Physically moving to and residing in the new locality”, and “Intent to remain in the new locality permanently or indefinitely as demonstrated by your actions” (FTB Publication 1031, 2025). What California does while you are still a resident is a different question, and California’s treatment of a plan during the resident years works through it.

How does this play out across the year I actually move?

The move year is the one that needs care, because it has a resident part and a nonresident part and the same plan can pay into both. The bar in 4 U.S.C. 114(a) attaches to the date each distribution is received rather than to the year as a whole, so two withdrawals from one 401(k) in the same calendar year can land on opposite sides of it. The example below is invented, and it stops short of computing a tax, because the rate turns on facts it doesn’t state.

Does this help if I moved to Canada rather than to another state?

Yes, and 4 U.S.C. 114 doesn’t ask where you went. The bar in 4 U.S.C. 114(a) runs to “an individual who is not a resident or domiciliary of such State”, with no requirement that you live in another state, or in the United States at all, so a Canadian resident drawing on a California 401(k) is inside it. What 4 U.S.C. 114 does not touch is the other two layers: it limits states only, so it says nothing about the US federal tax on the distribution, nothing about withholding, and nothing about how Canada taxes the same money.

• Those other two layers are the substance of what happens to a 401(k) and a Roth IRA when you move back to Canada, and they’re where the real number usually comes from.
• The state layer, which is the one people expect to be the fight, is generally the one that’s already settled.

What should I do next?

Fix your residency and domicile dates first, then line your distribution dates up against the later of the two. Write down when you abandoned the old domicile, when you moved, and what evidences the intent, because that is the question 4 U.S.C. 114(a) hands to state law. Then list every distribution in the move year and mark which side of that date each one falls on. If any of them is nonqualified deferred compensation rather than a plan from the main list, test its payout schedule separately, since that is the one category where the form of the payment decides the answer.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.