An Act To Ensure That the Exemption for Pensions Is Applied Fairly
Maine Legislature, Session 122, LD 0241
Committee: Taxation
Sponsors: DAVIS, EDGECOMB, FINCH
Amends: 36 MRSA §5122

Legislative Document 
No. 241 
H.P.180 
House of Representatives, January 18,2005 
An Act To Ensure That the Exemption for Pensions Is Applied 
Fairly 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative DAVIS of Falmouth. 
Jrj~m.~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: EDGECOMB of Caribou, FINCH of Fairfield. 
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. 1JM. as amended by PL 2003, c. 
§5, is further amended ,to read: 
M. 
For 
each individual 
who 
is 
a 
benefits under an employee retirement 
is the lesser of: 
primary 
recipient 
of 
plan, an amount that 
(1) 
Six thousand dollars reduced by the total amount 
of 
the 
individual's 
sgeial--~~~~~~y--~~it4T--aBa 
railroad retirement 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 
retirement plans included 
adjusted gross income. 
benefits 
under 
employee 
in the individual's federal 
For purposes of this paragraph, the followinq 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 40l(a), 
Section 403 or Section 457(b), 
except that distributions 
made pursuant to 
a 
see~i9B 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 ser ies 
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. 
Benefi ts 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; 
Page l-LR1580 (1) 
SUMMARY 
Under current law, in calculating a Maine resident's taxable 
income, 
the federal 
adjusted gross 
income of 
a 
resident who 
receives a pension may be reduced by an amount that equals $6,000 
reduced 
by 
the 
amount 
of 
the 
resident's 
social 
security 
benefits. 
This bill eliminates the reduction for social security 
benefits.