If you received a lump-sum distribution from the Kansas Public Employees Retirement System (KPERS), you may qualify for a Kansas subtraction that reduces or eliminates Kansas income tax on that distribution. Kansas provides special tax treatment for certain KPERS lump-sum distributions that are included in federal adjusted gross income (AGI).
What Is a KPERS Lump-Sum Distribution?
A lump-sum distribution generally occurs when a KPERS member receives some or all of their retirement plan funds in a single payment rather than as ongoing monthly retirement benefits. In many cases, part or all of the distribution is taxable for federal income tax purposes and must be reported on your federal return.
Kansas allows eligible taxpayers to subtract certain KPERS lump-sum distribution amounts from income on their Kansas return, even though the income may remain taxable federally.
Who Qualifies for the Kansas KPERS Lump-Sum Distribution Subtraction?
You may qualify for the subtraction if:
- You were a KPERS employee who terminated KPERS-covered employment after July 1, 1984.
- You elected to receive your KPERS contributions as a lump-sum distribution.
- The taxable portion of the distribution was included in your federal adjusted gross income.
If these requirements are met, Kansas allows you to subtract the qualifying amount from your Kansas income.
What Amount Can Be Subtracted?
Kansas allows a subtraction for:
- The amount of withdrawn accumulated KPERS contributions, or
- A partial lump-sum payment,
to the extent the amount was included in your federal adjusted gross income.
In other words, if federal tax law requires the distribution to be included in income, Kansas may allow that same amount to be removed from Kansas taxable income through a subtraction modification.
Where Is the Subtraction Reported?
To subtract a KPERS lump-sum distribution, go to:
- State Section
- Edit Kansas using the three dots
- Subtractions from Income
- Enter amounts withdrawn from a qualified retirement account that was originally received as Kansas Public Employee Retirement System (KPERS) lump sum distributions that you rolled over into a qualified retirement plan and shown as taxable on your 20XX federal return.
What If I Rolled My KPERS Distribution Into Another Retirement Account?
Kansas provides an additional subtraction for certain distributions withdrawn from a qualified retirement account when:
- The funds originally came from a KPERS lump-sum payment received at retirement,
- The funds were rolled into a qualified retirement account, and
- The withdrawn amount is included in federal adjusted gross income.
These amounts are reported separately on Schedule S, Line A11, which is specifically reserved for qualifying KPERS lump-sum distributions exempt from Kansas income tax after a rollover.