An Act To Modify Taxation of Benefits under Employee Retirement Plans, Including Retirement Plans for Teachers (AFTER DEADLINE)
Maine Legislature, Session 121, LD 1927
Committee: Taxation
Sponsors: GAGNON, SIMPSON, BRY ANT, HATCH, STANLEY, STRIMLING, WOODCOCK, EARLE, MARLEY, THOMPSON
Amends: 36 MRSA §5122

Legislative Document 
No. 1927 
S.P.764 
In Senate, March 16,2004 
An Act To Modify Taxation of Benefits under Employee Retirement 
Plans, Including Retirement Plans for Teachers 
(AFTER DEADLINE) 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
205. 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Senator GAGNON of Kennebec. 
Cosponsored by Representative SIMPSON of Auburn and 
JOy J.O'BRIEN 
Secretary ofthe Senate 
Senators: BRY ANT of Oxford, HATCH of Somerset, STANLEY of Penobscot, STRIMLING 
of Cumberland, WOODCOCK of Franklin, Representatives: EARLE of Damariscotta, 
MARLEY of Portland, THOMPSON of China. 
Printed on recycled paper 
391, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §5122. sub-§2. ~M. as amended by PL 2003, c. 
§5, is further amended to read: 
M. 
For 
each individual 
who 
is 
a 
primary recipient of 
benefi ts under an employee retirement plan, an amount that 
is the lesser of: 
(1) 
SiH-~~-a~±±aF&-~€4~~~~y-~Re-~~~~-affieHHt 
eE--~~--~~~~'~--seeia±--~~~~~~y--~~it~--aHe 
~ai±~eae-~e~~~emeR~-~~~~~-~~~-~~-gHi~ea-State6T 
eH~-Het-±ess-~RaH-$GT The following amounts reduced by 
the total amount of the individual's social security 
benefits and railroad retirement benefits paid by the 
United States, but not less than $0, for each tax year 
beginning in the 
following years, 
except that this 
reduction does 
not 
apply to benefits paid under 
a 
military retirement planT-e~~ 
( a) 
2005, $8,000; 
(b) 
2006, $9,000; 
( c) 
2007, $10,000; 
( d) 
2008, $11,00Q..l 
( e) 
2009, $12,000; 
( f) 
2010, $13,000; 
(g) 
2011, $14,000; 
( h) 
2012, $15,000; 
(i) 
2013, $16,000; 
( j ) 
2014, $17,000; and 
(k} 
2015, 
~20,000. 
For tax years beginning January 1, 2016, the deduction 
under this subparagraph is equal to the amount of the 
maximum social security benefit reduced by the total 
amount 
of 
social 
security 
benefits 
and 
railroad 
retirement benefits actually received by the taxpayer, 
but 
not less 
than 
$0. 
The 
State Tax 
Assessor 
by 
September 15th of each year shall 'determine! the amount 
of the deduction and incorporate the change, if any, 
into the income tax forms, instructions and withholding 
tables for the taxable year; or 
(2) 
The aggregate of benefits received by the primary 
recipient under employee retirement plans and included 
in federal adjusted gross income. 
For purposes of this paragraph, the following terms have the 
following 
meanings. 
"Primary 
recipient" 
means 
the 
individual upon whose earnings the employee retirement plan 
benefits 
are 
based 
or 
the 
surviving 
spouse 
of 
that 
individual. 
"Employee 
retirement 
plan" 
means 
a 
state, 
federal or military retirement plan or any other retirement 
benefit plan established and maintained by an employer for 
the benefit of its employees under the Code, Section 401(a), 
Section 403 
or Section 457(b), 
except that distributions 
made pursuant to a section 457(b) plan are not eligible for 
the deduction provided by this paragraph if they are made 
prior 
to 
age 
and 
are 
not 
part 
of 
a 
series 
of 
substantially equal periodic payments made for the life of 
the primary recipient or the joint lives of the primary 
recipient 
and 
that 
recipient's 
desiq,nated 
beneficiary. 
"Employee retirement plan" does not include an individual 
retirement account under Section 408 of the Code, a Roth IRA 
under 
Section 
408A 
of 
the 
Code, 
a 
rollover 
individual 
retirement 
account, 
a 
simplified 
employee 
pension 
under 
Section 
408(k) 
of 
the 
Code 
or 
an 
ineligible 
deferred 
compensation 
plan 
under 
Section 
(f) 
of 
the 
Code. 
Benefits under an employee retirement plan do not include 
distributions that are subject to the tax imposed by the 
Code, 
Section 
72(t). 
"Military 
retirement 
plan" 
means 
benefits received as a result of service in the active or 
reserve components of the Army, Navy, Air Force, Marines or 
Coast Guard; 
Sec. 2. Application. 
That section of this Act that amends the 
Maine Revised Statutes, Title 36, 
section 5122, 
subsection 2, 
paragraph M applies to tax years beginning on or after January 1, 
2005. 
SUMMARY 
Current law provides a deduction from the state income tax 
for the first $6,000 of income from certain public, private ancl 
military pensions. 
This 
January 1, 
amount 
of 
bill 
2005 
the 
increases 
the 
deduction 
to 
$8,000 
and by $1, 000 each subsequent year 
deduction 
is 
$17,000 
in 
2014. 
In 
beginning 
until the 
2015 
the 
deduction 
increases 
to 
$20,000. 
Beginning 
wi t.h 
tax 
years 
beginning January 1, 2016, the amount of the deduction is equal 
to the amount of the maximum federal tax exemption for social 
security benefits reduced by any social security benefits and 
railroad retirement benefits actually received by the t.axpayer. 
Fage 3-LR2707(1)