my wife gets a medical retirement. She says it can either be counted as income now or retirement later but not both. Is this true. We live in Calif

That sounds very likely to be true.  One of the ways most retirement plans work is by putting off when the money that goes into them is counted as income to later years, when that income will get taxed at a much lower rate.

To be sure, you would need to get the paperwork on this to a qualified attorney in your area, who could review it and check on other facts that might affect the answer.  One place to find a lawyer who can help you with this is our website, http://attorneypages.com