Updated October 16, 2026. Quick answer: Pennsylvania exempts distributions from eligible retirement plans after retirement age, but its guide says eligible plans generally include 401(a) plans, IRAs, Roth IRAs and similar plans, does not name 403(b) or 457(b) plans in that list, and says a plan’s federal qualified status is not controlling for eligibility.
Pennsylvania at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | Not stated for 403(b) or 457(b) |
| Do the state’s documents name these plans? | The documents read name both 403(b) and 457 plans |
| Retirement exclusion or credit | Distributions from eligible Pennsylvania retirement plans are exempt after retirement age |
| Public-employee pension rule | Not separately described for 403(b) or 457(b) plans |
| Rate in the documents read | 3.07% |
| Changed for 2026? | The documents read describe no 2026 change |
What the Pennsylvania documents say
The Department of Revenue’s guide says “Generally, eligible Pennsylvania retirement plans include qualified pension plans under Section 401(a)” and that plan payouts after retirement age are exempt. Its examples of eligible plans are 401(a) plans, IRAs, Roth IRAs, SEPs and Keogh plans. It also says a plan is eligible if, at a minimum, it is in writing and communicated to participants, sets eligibility requirements tied to separation from service or old age or infirmity and long service, pays at regular intervals after separation until death, and does not allow distributions to an employee before termination of employment except incidental disability benefits or return of previously taxed contributions.
The guide mentions 403(b) plans in a different rule: contributions made under a cash or deferred arrangement in which the employee may unilaterally elect to have the employer pay them into a plan such as a 403(b) plan or to the employee in cash are not excludable from the employee’s Pennsylvania income. The rate page says “Pennsylvania personal income tax is levied at the rate of 3.07 percent”.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The guide does not say whether a 403(b) or 457(b) distribution is exempt after retirement age; this page does not claim it either way.
- Section 457 appears in the guide only in a nonqualified deferred compensation context, not as an eligible plan.
Common mistakes
- Assuming Pennsylvania’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether Pennsylvania taxes 401(k) and IRA withdrawals, Pennsylvania retirement taxes, whether Pennsylvania taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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Answer againSources
- PA Personal Income Tax Guide: Gross Compensation (DSM-12): https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/papersonalincometaxguide/documents/pitguide_grosscompensation.pdf
- Personal Income Tax: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.