104TH CONGRESS

1ST SESSION H. R. 394

AN ACT

To amend title 4 of the United States Code to limit

State taxation of certain pension income.
104TH CONGRESS

1ST SESSION H. R. 394

AN ACT

To amend title 4 of the United States Code to limit State

taxation of certain pension income.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. LIMITATION ON STATE INCOME TAXATION OF

2 CERTAIN PENSION INCOME.

3 (a) IN GENERAL.—Chapter 4 of title 4, United

4 States Code, is amended by adding at the end the follow5 ing:

6 ‘‘§ 114. Limitation on State income taxation of certain

7 pension income

8 ‘‘(a) No State may impose an income tax on any re9 tirement income of an individual who is not a resident or

10 domiciliary of such State (as determined under the laws

11 of such State).

12 ‘‘(b) For purposes of this section—

13 ‘‘(1) The term ‘retirement income’ means any

14 income from—

15 ‘‘(A) a qualified trust under section 401(a)

16 of the Internal Revenue Code of 1986 that is

17 exempt under section 501(a) from taxation;

18 ‘‘(B) a simplified employee pension as de19 fined in section 408(k) of such Code;

20 ‘‘(C) an annuity plan described in section

21 403(a) of such Code;

22 ‘‘(D) an annuity contract described in sec23 tion 403(b) of such Code;

24 ‘‘(E) an individual retirement plan de25 scribed in section 7701(a)(37) of such Code;
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1 ‘‘(F) an eligible deferred compensation

2 plan (as defined in section 457 of such Code);

3 ‘‘(G) a governmental plan (as defined in

4 section 414(d) of such Code);

5 ‘‘(H) a trust described in section

6 501(c)(18) of such Code; or

7 ‘‘(I) any plan, program, or arrangement

8 described in section 3121(v)(2)(C) of such

9 Code, if such income—

10 ‘‘(i) is part of a series of substantially

11 equal periodic payments (not less fre12 quently than annually) made for—

13 ‘‘(I) the life or life expectancy of

14 the recipient (or the joint lives or joint

15 life expectancies of the recipient and

16 the designated beneficiary of the re17 cipient), or

18 ‘‘(II) a period of not less than 10

19 years, or

20 ‘‘(ii) is a payment received after ter21 mination of employment and under a plan,

22 program, or arrangement (to which such

23 employment relates) maintained solely for

24 the purpose of providing retirement bene25 fits for employees in excess of the limita-
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1 tions imposed by 1 or more of sections

2 401(a)(17), 401(k), 401(m), 402(g),

3 403(b), 408(k), or 415 of such Code or

4 any other limitation on contributions or

5 benefits in such Code on plans to which

6 any of such sections apply.

7 Such term includes any retired or retainer pay of a

8 member or former member of a uniform service com9 puted under chapter 71 of title 10, United States

10 Code.

11 ‘‘(2) The term ‘income tax’ has the meaning

12 given such term by section 110(c).

13 ‘‘(3) The term ‘State’ includes any political sub14 division of a State, the District of Columbia, and the

15 possessions of the United States.

16 ‘‘(e) Nothing in this section shall be construed as hav17 ing any effect on the application of section 514 of the Em18 ployee Retirement Income Security Act of 1974.’’.

19 (b) CONFORMING AMENDMENT.—The table of sec20 tions for chapter 4 of title 4, United States Code, is

21 amended by adding at the end the following:

‘‘114. Limitation on State income taxation of certain pension income’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to amounts received after Decem3 ber 31, 1995.

Passed the House of Representatives December 18

(legislative day, December 15), 1995.

Attest:

Clerk.