An Act To Include Disability Retirement Income in Retirement Income Eligible for Tax Exemption
Maine Legislature, Session 121, LD 1670
Committee: Taxation
Sponsors: WATSON, DUNLAP, LEMOINE, PATRICK, PELLON, SA VIELLO, SMITH, MAYO
Amends: 36 MRSA §5122

Legislative Document 
No. 1670 
H.P.1246 
House of Representatives, December 19, 2003 
An Act To Include Disability Retirement Income in Retirement 
Income Eligible for Tax Exemption 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203. 
Received by the Clerk of the House on December 16,2003. Referred to the Committee on 
Taxation pursuant to Joint Rule 308.2 and ordered printed pursuant to Joint Rule 401. 
Presented by Representative WATSON of Bath. 
7Y/~ 
/J1.1l!IlC~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: DUNLAP of Old Town, LEMOINE of Old Orchard Beach, 
PATRICK of Rumford, PELLON of Machias, SA VIELLO of Wilton, SMITH of Van Buren, 
Senator: MAYO of Sagadahoc. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
391, 
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 
benefits under an employee 
retirement plan or disability 
retirement plan, an amount that is the lesser of: 
(1) 
Six thousand dollars reduced by the total amount 
of 
the 
individual's 
social 
security 
benefits 
anaL 
railroad retirement benefits and disability retirement 
plan benefits paid by the United States, but not less 
than $0. 
The reduction does not apply to benefits paid 
under a military retirement plan; or 
(2) 
The aggregate of benefits received by the primary 
recipient 
as 
disability 
income 
or 
under 
employee 
retirement plans included in the individual's 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. 
"Disability 
retirement 
plan benefits" 
means 
benefits 
received 
pursuant 
to 
Title 
5, 
chapter 
423, 
subchapter 5, article 3 or 3-A. 
"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 55 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 
designated 
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 
Page I-LR2235(1) 
reserve components of the Army, Navy, Air Force, Marines or 
Coast Guard; 
SUMMARY 
Current law provides an exemption for the first $6,000 of 
retirement 
income 
received 
pursuant 
to 
a 
state, 
federal 
or 
military retirement plan. 
This bill provides the same exemption 
for 
the first $6,000 of 
income 
received under 
a 
disability 
retirement 
plan policy 
administered 
by 
the 
State 
for 
state 
employees and teachers.