Do 401K contributions reduce the taxable amount of State withholding in KY and IN?
Answer Indiana does not tax 401K contributions or withholding tax. Kentucky does not tax 401K contributions for withholding tax. If the 401K is under a 125 plan in Indiana SUTA is not taxed on 40K contributions, under a Coda 401k Plan Suta is taxed. If the 401K is under a 125 or a coda plan Suta is taxable in Kentucky.
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