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Form 540Form 540NRSchedule CA (540)Schedule CA (540NR)Traditional IRACalifornia Resident Income TaxReturnCalifornia Nonresident or Part-YearResident Income Tax ReturnCalifornia Adjustments — ResidentsCalifornia Adjustments —Nonresidents or Part-Year ResidentsA traditional IRA is any IRA that isnot a Roth IRA or SIMPLE IRAFiguring Your CaliforniaPension, Annuity, and IRAAmountsComplete your federal tax return before starting your Californiatax return. If you need information on how to report yourpension, annuity, or IRA income on your federal tax return, referto federal forms, instructions, and publications.Once you have completed your federal tax return, compute theCalifornia amounts of your pension, annuity, or IRA income. Ifthe California amount is different than the federal amount, youwill need to make a California adjustment.* Depending on theCalifornia form you file, report your California adjustment on oneof the following forms: Schedule CA (540) for Form 540 filers. Schedule CA (540NR) for Form 540NR filers.*A California adjustment is an addition to or subtraction fromyour federal AGI. Your federal pension, annuity, or IRA income isincluded in the federal AGI figure that you list on your Californiatax return (Form 540 or 540NR, line 13).Maximum Contribution Amounts to Traditional and RothIRAs. Taxpayers may contribute the following amounts to atraditional and/or Roth IRA:Age2016Under 50 5,50050 & Over 6,50020172018201920202021 5,500 6,500 5,500 6,500 6,000 7,000 6,000 7,000 6,000 7,000Maximum Contribution Amounts to 401(k), 403(b), and 457Plans. Taxpayers may contribute the following amounts to adeferred compensation plan:Age201620172018201920202021Under 50 18,000 18,000 18,500 19,000 19,500 19,50050 & Over 24,000 24,000 24,500 25,000 26,000 26,000Maximum Contribution Amounts to Savings IncentiveMatch Plan for Employees (SIMPLE). Taxpayers may contributethe following amounts to a Simple IRA and Simple 401(k):Age201620172018201920202021Under 50 12,500 12,500 12,500 13,000 13,500 13,50050 & Over 15,500 15,500 15,500 16,000 16,500 16,500Maximum Contribution Amounts to Keogh. The maximumcontribution amount a taxpayer can make to a Keogh plan peryear is as follows: 2021, the amount is 58,000 2020, the amount is 57,000 2019, the amount is 56,000 2018, the amount is 55,000 2017, the amount is 54,000 2016, the amount is 53,000Page 4FTB Pub. 1005 2020Maximum Deduction and Contribution Amounts to aSimplified Employee Pension (SEP). The maximum deductionand contribution amounts per plan year to an SEP are asfollows: 2021, the lesser of 58,000 or 25% of compensation(compensation is limited to 290,000) 2020, the lesser of 57,000 or 25% of compensation(compensation is limited to 285,000) 2019, the lesser of 56,000 or 25% of compensation(compensation is limited to 280,000) 2018, the lesser of 55,000 or 25% of compensation(compensation is limited to 275,000) 2017, the lesser of 54,000 or 25% of compensation(compensation is limited to 270,000) 2016, the lesser of 53,000 or 25% of compensation(compensation is limited to 265,000)Rollovers. Section 457 plans can be rolled over to otherqualified plans. In addition, distributions from a Section 457 plancan be used to purchase permissive service credit for otherretirement plans.A surviving spouse can roll over distributions from a deceasedspouse’s qualified retirement plan to a Section 457 plan in whichthe surviving spouse participates.Social Security and RailroadRetirement BenefitsCalifornia law differs from federal law in that California does nottax: Social security benefits. Tier 1 railroad retirement benefits. Tier 2 railroad retirement benefits reported on federalForm RRB-1099-R, Annuities or Pensions by the RailroadRetirement Board.** Sick pay benefits under the Railroad UnemploymentInsurance Act.Make an adjustment to exclude any of this income if itwas included in your federal AGI. See the instructions forSchedule CA (540), Part I or Schedule CA (540NR), Part II,Section A, lines 1, 5a, 5b, and 6b, for more information.The information listed applies only to United States socialsecurity and railroad retirement. Foreign social security istaxable by California as annuity income. A tax treaty betweenthe United States and another country which excludes theforeign social security from federal income or which treats theforeign social security as if it were United States social securitydoes not apply for California purposes.** Railroad benefits paid by individual railroads are taxable byCalifornia. These benefits are reported on federal Form 1099-R,Distributions From Pensions, Annuities, Retirement or ProfitSharing Plans, IRAs, Insurance Contracts, etc.Three-Year RuleThe “Three-Year Rule” was repealed for retirees whose annuitystarting date is after December 31, 1986. However, if yourannuity starting date was before January 1, 1987, and youelected to use the “Three-Year Rule,” continue to use thismethod.Under the “Three-Year Rule,” amounts you receive are nottaxed until your after-tax contributions are recovered. Once yourcontributions are recovered, your pension or annuity is fullytaxable.Generally, the California and federal taxable amounts arethe same. If the California and federal taxable amounts aredifferent, enter the difference on Schedule CA (540), Part I, orSchedule CA (540NR), Part II, Section A, line 5b, column C.

California Residents Receivingan Out-of-State PensionIn GeneralCalifornia residents are taxed on ALL income, includingincome from sources outside California. Therefore, a pensionattributable to services performed outside California butreceived after you became a California resident is taxable in itsentirety by California. See Examples 1 through 4.Examples:Example 1 – You worked 10 years in Texas, moved to Californiaand worked an additional 5 years for the same company. Youretired in California and began receiving your pension, which isattributable to your services performed in both California andTexas.Determination: You are a full-year resident of California. As aCalifornia resident, you are taxed on all your income, regardlessof its source. Do not make an adjustment on Schedule CA (540)to exclude any of the pension income.Example 2 – You worked in New York for 20 years. You retiredand moved permanently to California on January 1. While livingin California, you begin receiving your pension attributable to theservices performed in New York.Determination: You are a full-year resident of California. As aCalifornia resident, you are taxed on all your income, regardlessof its source. Do not make an adjustment on Schedule CA (540)to exclude any of the pension income.Example 3 – In December 2019, you retired and movedpermanently to California. Prior to your move, you elected toreceive your pension as a lump-sum distribution. Your pensionis attributable solely to services you performed in Washingtonprior to your move. You received the lump-sum distribution inFebruary 2020, after you became a California resident.Determination: You are a full-year California resident in 2020. Asa California resident, you are taxed on all income, regardless ofits source. Do not make an adjustment on Schedule CA (540) toexclude any portion of the Washington pension income.Example 4 – You worked in Georgia for 20 years. You retiredand began receiving your monthly pension on January 1, 2020,while you were still living in Georgia. Your pension is 2,000 amonth. Because you did not contribute to the plan, your pensionis fully taxable. On May 1, 2020, you moved permanently to California.Determination: You are a part-year resident of California.While you are a nonresident, only your California-sourceincome is taxable by California. While you are a resident,all of your income, regardless of its source, is taxable byCalifornia. Because your pension is attributable to servicesyou performed in Georgia, your pension has a Georgia source.None of the pension received while you were a nonresidentof California is taxable by California. However, the pensionreceived during the period that you are a California resident(May 1 through December 31) is taxable by California.Therefore, 16,000 ( 2,000 x 8 months) is the taxable portionof the pension to enter on Schedule CA (540NR), Part II,Section A, line 5b, column E. Do not make an adjustment onSchedule CA (540NR), column B, to exclude any of the Georgiapension income.Military PensionIf you are a California resident, your military pension is taxableby California, regardless of where the service was performed.Nonresidents of CaliforniaReceiving a California PensionIn GeneralCalifornia does not impose tax on retirement income receivedby a nonresident after December 31, 1995. For this purpose,retirement income means any income from any of the following: A qualified plan described in IRC Section 401. A qualified annuity plan described in IRC Section 403(a). A tax-sheltered annuity described in IRC Section 403(b). A governmental plan described in IRC Section 414(d). A deferred compensation plan maintained by a state or localgovernment or an exempt organization described in IRCSection 457. An IRA described in IRC Section 7701(a)(37), including RothIRA and SIMPLE. A simplified employee pension described in IRCSection 408(k). A trust described in IRC Section 501(c)(18). A military pension, even if the military service was performedin California. A private deferred compensation plan program orarrangement described in IRC Section 3121(v)(2)(C) only ifthe income is either of the following:1. Part of a series of substantially equal periodic payments(not less frequently than annually) made over the lifeor life expectancy of the participant or those of theparticipant and the designated beneficiary or a period ofnot less than 10 years.2. A payment received after termination of employmentunder a plan program or arrangement maintained solelyto provide retirement benefits for employees in excess ofthe limitations on contributions or benefits imposed by theIRC. Any retirement or retainer pay received by a member orformer member of a uniform service computed underChapter 71 of Title 10, United States Code.Individual RetirementArrangements (IRAs)The California treatment of IRAs is generally the same as thefederal treatment. For information on the federal treatmentof IRAs, refer to federal Publication 590-A, Contributionsto Individual Retirement Arrangements (IRAs), federalPublication 590-B, Distributions from Individual RetirementArrangements (IRAs), and federal Publication 560, RetirementPlans for Small Business (SEP, SIMPLE, and Qualified Plans).IRA DeductionSECURE Act repeal of maximum age 70½The SECURE Act repealed the maximum age of 70½ fortraditional IRA contributions. California law does not conformto this federal provision. If you report an IRA deduction onSchedule CA (540), Part I, or Schedule CA (540NR), Part II,Section C, line 19, column A at age 70½ or older, include thatamount deducted for federal in the total you enter on Section C,line 22, column B. Enter the amount and write “IRA AGE” on thedotted line next to line 22. In addition, if you reported an IRAdeduction on Schedule CA (540NR), Part II, Section C, line 19,column A at age 70½ or older, follow the following instructions: When adding line 10 through line 21 in column D, excludethe line 19, column D, IRA deduction amount at age 70½ orolder, from total of line 22, column D.FTB Pub. 1005 2020 (REV 04-21)Page 5

When adding line 10 through line 21 in column E, excludethe line 19, column E, IRA deduction amount at age 70½ orolder, from total of line 22, column E.Limit if Covered by Employer PlanIf you are covered by an employer’s retirement plan or if youfile a joint tax return with your spouse who is covered by sucha plan, you may be entitled to only a partial deduction or nodeduction at all, depending on your income. See the federalinstructions for more information. You can elect to designateotherwise deductible contributions as nondeductible. However,you do not have to elect the same treatment for Californiapurposes that you did for federal purposes.To take the election on the Schedule CA (540 or 540NR), thefederal deduction is taken on Section C, line 19, column A,as usual, but the election for California will be on Section C,line 22, column B or C. Write: “408 election” to the left of the line.Following is a summary of the California IRA deduction allowed.To calculate any adjustments to your IRA deduction, seeSchedule CA (540 or 540NR) instructions.2005 Through 2020California law is the same as federal law. For a SIMPLE IRA,an elective deferral may be made for up to the amount listedin the chart below. For a traditional IRA, the most that can becontributed is the smaller of: The amount listed in the chart below or 100% of your compensation.IRAAgeUnder 5050 & Over2005 4,000 4,500AgeUnder 5050 & Over2019-2020 6,000 7,0002006-2007 4,000 5,0002008-2012 5,000 6,0002013-2018 5,500 6,5002009-2012 11,500 14,0002013-2014 12,000 14,500SIMPLE IRAAgeUnder 5050 & Over2005-2006 10,000 12,5002007-2008 10,500 13,000AgeUnder 5050 & Over2015-2018 12,500 15,5002019 13,000 16,0002020 13,500 16,5002002 Through 2004California law was the same as federal law. For a SIMPLE IRA,an elective deferral may be made for up to the amount listedin the chart below. For a traditional IRA, the most that can becontributed is the smaller of: The amount listed in the chart below or 100% of your compensation.AgeUnder 5050 or OlderIRA2002 - 20043,0003,50020027,0007,500SIMPLE IRA200320048,0009,0009,00010,5001987 Through 2001California law was the same as federal law. The IRA deductionis the lesser of 2,000 or 100% of your compensation. For aSIMPLE IRA, an elective deferral may be made for up to 6,500for 2001 and 6,000 for 1997 through 2000.1982 Through 1986California law was different from federal law. The maximumfederal deduction for an individual was 2,000, and wasavailable to active participants in qualified or governmentretirement plans and to persons who contributed to tax-shelteredannuities. The California IRA deduction was the lesser of 1,500or 15% of compensation with an additional deduction for aPage 6FTB Pub. 1005 2020 (REV 04-21)nonworking spouse, for a maximum deduction of 1,750. AnIRA deduction was not allowed if you were an active participantin a qualified or government retirement plan or contributed to atax-sheltered annuity.1976 Through 1981California law was the same as federal law. The IRAdeduction for an individual was the lesser of 1,500 or 15% ofcompensation. An IRA deduction was not allowed if you werean active participant in a qualified or government retirementplan or contributed to a tax-sheltered annuity.1975California law was different from federal law. California did notallow an IRA deduction. Therefore, income earned in 1975 and1976 on the 1975 contribution was taxable.Differences in the amount of IRA deduction you could claimmay have occurred prior to January 1, 1996 if there was adifference between your federal self-employment income andyour California self-employment income.Form 540NR FilersIf you file Form 540NR, your IRA deduction onSchedule CA (540NR), Part II, Section C, line 19, column E, islimited to the lesser of: The IRA deduction allowed on your federal tax return. The compensation reported on your Schedule CA (540NR),column E.Example: You are a nonresident of California who is under50 years of age. During the year, you worked temporarily inCalifornia. Your California compensation is 1,000, which youreported on Schedule CA (540NR), column E. Your federalcompensation is 10,000. Your allowable IRA deduction on yourfederal tax return is 6,000.Determination: Your allowable California IRA deduction thatyou report on Schedule CA (540NR), column E, is 1,000.This is the lesser of (1) the 6,000 IRA deduction allowed onyour federal tax return, or (2) the 1,000 of compensation youreported on Schedule CA (540NR), column E.IRA DistributionResidents of CaliforniaYour IRA distribution is fully taxable if your IRA contributionswere fully deductible. If your IRA contributions were partially orfully nondeductible, then the nondeductible contributions are nottaxed when they are distributed to you. Your basis is the amountof your nondeductible contributions. How you recover your basisdepends on when your nondeductible contributions were made.Nondeductible Contributions Made After 1986If you made nondeductible contributions after 1986, a part ofeach distribution is considered a return of your basis and is nottaxable. The California taxable amount will generally be the sameas the federal taxable amount, and you should not make anadjustment to your federal AGI on Schedule CA (540 or 540NR).However, if you elected to treat a contribution differently forfederal purposes than for California purposes, the taxableamounts will differ. Compute the California taxable amountusing the instructions for federal Form 8606, NondeductibleIRAs. When making this computation, for the recovery ofnondeductible contributions made after 1987, make sure youdo not include nondeductible contributions made before 1987.The nondeductible contributions made before 1987 will berecovered as explained in the following paragraph.Compute the adjustment to federal AGI by comparing yourfederal taxable amount with the California taxable amount. If the federal amount is more than the California amount,enter the difference on Schedule CA (540), Part I orSchedule CA (540NR), Part II, Section A, line 4b, column B.

If the federal amount is less than the California amount,enter the difference on Schedule CA (540), Part I orSchedule CA (540NR), Part II, Section A, line 4b, column C.Nondeductible Contributions Made Before 1987If you made nondeductible contributions before 1987, noneof your distribution is taxed until you have recovered yourpre-1987 basis. Because there was a difference between federaland California contribution limits before 1987, there may be adifference in the California and federal taxable amounts. If thereis a difference, make an adjustment to reduce your federal AGIto the correct taxable amount for California.Your adjustment is the lesser of your pre-1987 California basisor IRA distribution included in federal AGI.Use Worksheet I — Part A on page 14 to compute yourpre-1987 California basis. Use Worksheet I — Part B to computeyour adjustment to federal AGI and your remaining pre-1987California basis. See Example 1 and Example 2 on page 8. UseWorksheet II on page 14, as a summary of your California basisand its recovery.If you have more than one IRA account, combine all your IRAsto complete the worksheet. If both you and your spouse/RDPhave IRAs, you each must complete a separate worksheetbased on your own IRA contributions, deductions, anddistributions.Nonresidents of CaliforniaChange of ResidencyFrom resident to nonresidentFor IRA distributions received while you were a Californiaresident, see Residents of California on page 6 for the taxabilityof your distributions.From nonresident to residentFor IRA distri

Simplified Employee Pension (SEP) 12 Self-Employed Retirement Plans (Keoghs) 12 Lump-Sum Distribution 13 Change in Residency 13 Tax on Early Distributions 13 Basis Worksheets 14 Additional Information 15 General Phone Service 15 ONLINE SERVICES Go to . ftb.ca.gov. for: MyFTB - view payments, balance due, and withholding information.