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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
Both the House and Senate have passed H.R. 4019, legislation that would clarify that state taxation of retirement income is limited to the state where the retiree resides. This treatment would apply whether the retirement payments are made to a retired employee or to a retired partner. Section 114(a) of the United States Code generally bars a state from taxing retirement income of its former residents or nonresidents who earned income in the state. Since this section was enacted in 1996, one state has interpreted it as exempting only payments made to retired employees and not to retired partners.
The bill would clarify that U.S.C. Sec. 114(a) covers nonresident retired partners. States could not impose an income tax on nonresident retirement income received under certain nonqualified deferred compensation plans, including written plans, in effect at the time of retirement, providing for payments to a retired partner in recognition of prior service. Payments would have to be made over ten years or more and income received in substantially equal periodic payments. The bill would make this treatment retroactive to 1996.
In addition, the bill would clarify the definition of "substantially equal periodic payments" to permit plan caps on retiree payments and cost-of-living adjustments. The substantially equal periodic payment test would be satisfied when payments include components from both a qualified and nonqualified plan.
For more information on this and related topics, consult the CCH Pension Plan Guide.
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