What's happening
This bill clarifies that certain nonqualified pension plan distributions are eligible for the state income tax exemption for pensions and annuities.
Why it matters
Expands state income tax exemptions to include distributions from nonqualified pension plans. , as long as they otherwise meet age and service requirements—potentially benefiting retirees with diverse retirement arrangements beyond traditional qualified plans.
Clarifies that eligible distributions are covered even if reported as wages on IRS Form W-2. , which could resolve confusion for retirees and tax preparers about which retirement payments qualify for the exemption.
May incentivize broader retirement planning options. by ensuring that more forms of employer-sponsored retirement income, not just those from qualified plans, receive equal state tax treatment, thus supporting financial flexibility for retirees.
Explicitly excludes lump sum distributions from this expanded exemption. , maintaining a distinction between periodic retirement income and one-time payouts, which could impact how retirees choose to receive their pension benefits.
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Who cares
Headline styles
Clarify Pension Tax Exemptions
Plain English, a few words. Used as the page title.
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History
- Held for consideration in ways and means
- Referred to ways and means
- Referred to ways and means
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4336
2017-2018 Regular Sessions
IN ASSEMBLY
February 2, 2017
Introduced by M. of A. KOLB -- read once and referred to the Committee on Ways and Means
AN ACT to amend the tax law, in relation to clarifying the applicability of certain exemptions to periodic distributions from a nonqualified pension plan
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph 3-a of subsection (c) of section 612 of the tax law, as amended by section 3 of part I of chapter 59 of the laws of 2015, is amended to read as follows:
(3-a) Pensions and annuities received by an individual who has attained the age of fifty-nine and one-half, not otherwise excluded pursuant to paragraph three of this subsection, to the extent includible in gross income for federal income tax purposes, but not in excess of twenty thousand dollars, which are periodic payments attributable to personal services performed by such individual prior to his retirement from employment, which arise (i) from an employer-employee relationship or (ii) from contributions to a retirement plan which are deductible for federal income tax purposes. However, the term "pensions and annuities" shall also include distributions received by an individual who has attained the age of fifty-nine and one-half from an individual retirement account or an individual retirement annuity, as defined in section four hundred eight of the internal revenue code, and distributions received by an individual who has attained the age of fifty-nine and one-half from self-employed individual and owner-employee retirement plans which qualify under section four hundred one of the internal revenue code, whether or not the payments are periodic in nature. The term "pensions and annuities" shall also include distributions from pension plans that are not qualified under the Internal Revenue Code, but otherwise meet the requirements of this subsection, regardless of whether such distributions are reported as wages on IRS Form W-2. Never-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03236-01-7
A. 4336 2
theless, the term "pensions and annuities" shall not include any lump sum distribution, as defined in subparagraph [(D)] (A) of paragraph four of subsection (e) of section four hundred two of the internal revenue code and taxed under section six hundred three of this article. Where a husband and wife file a joint state personal income tax return, the modification provided for in this paragraph shall be computed as if they were filing separate state personal income tax returns. Where a payment would otherwise come within the meaning of the term "pensions and annuities" as set forth in this paragraph, except that such individual is deceased, such payment shall, nevertheless, be treated as a pension or annuity for purposes of this paragraph if such payment is received by such individual's beneficiary.
§ 2. This act shall take effect on the one hundred twentieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.