An Act To Make Additional Technical Changes to Recently Enacted Tax Legislation Concerning Pension Income
Maine Legislature, Session 127, LD 1506
Committee: Taxation
Sponsors: FREDETTE, FARRIN, GOLDEN, HANINGTON, NUTTING, SEAVEY, SIROCKI, TIMBERLAKE
Amends: 36 MRSA §5122

Legislative Document 
No. 1506 
H.P. 1029 
House of Representatives, December 23, 2015 
An Act To Make Additional Technical Changes to Recently Enacted 
Tax Legislation Concerning Pension Income 
(EMERGENCY) 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203. 
Received by the Clerk of the House on December 21, 2015.  Referred to the Committee on 
Taxation pursuant to Joint Rule 308.2 and ordered printed pursuant to Joint Rule 401. 
ROBERT B. HUNT 
Clerk 
Presented by Representative FREDETTE of Newport. 
Cosponsored by Representatives: FARRIN of Norridgewock, GOLDEN of Lewiston, 
HANINGTON of Lincoln, NUTTING of Oakland, SEAVEY of Kennebunkport, SIROCKI of 
Scarborough, TIMBERLAKE of Turner. 
Emergency preamble. Whereas, acts and resolves of the Legislature do not 
become effective until 90 days after adjournment unless enacted as emergencies; and 
Whereas, state tax law needs to be updated before the 90-day period expires to 
ensure the proper filing and processing of income tax returns for 2015; and 
Whereas, legislative action is immediately necessary to ensure continued and 
efficient administration of the state income tax; and 
Whereas, in the judgment of the Legislature, these facts create an emergency within 
the meaning of the Constitution of Maine and require the following legislation as 
immediately necessary for the preservation of the public peace, health and safety; now, 
therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §5122, sub-§2, ¶M-1, as amended by PL 2015, c. 328, §3, is 
further amended to read: 
M-1.  For tax years beginning on or after January 1, 2014 but before January 1, 2016, 
for each individual who is a primary recipient of retirement plan benefits under an 
employee retirement plan or an individual retirement account, an amount that is the 
lesser of the aggregate of retirement plan benefits under employee retirement plans or 
individual retirement accounts included in the individual's federal adjusted gross 
income and the pension deduction amount 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.  The social security benefits and railroad 
retirement benefits reduction does not apply to benefits paid under a military 
retirement plan. 
For purposes of this paragraph, the following terms have the following meanings. 
(1)  "Employee retirement plan" means a state or, 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 
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 a military retirement plan or survivor benefits 
under such a plan. 
(2)  "Individual retirement account" means an individual retirement account 
under Section 408 of the Code, a Roth IRA under Section 408A of the Code, a 
simplified employee pension under Section 408(k) of the Code or a simple 
retirement account for employees under Section 408(p) of the Code. 
(3)  "Military retirement plan" means retirement plan benefits received as a result 
of service in the active or reserve components of the Army, Navy, Air Force, 
Marines or Coast Guard. 
(4)  "Pension deduction amount" means $10,000 for tax years beginning on or 
after January 1, 2014. 
(5)  "Primary recipient" means the individual upon whose earnings or 
contributions the retirement plan benefits are based or the surviving spouse of 
that individual. 
(6)  "Retirement plan benefits" means employee retirement plan benefits, except 
pick-up contributions for which a subtraction is allowed under paragraph E, 
reported as pension or annuity income for federal income tax purposes and 
individual retirement account benefits reported as individual retirement account 
distributions for federal income tax purposes.  "Retirement plan benefits" does 
not include distributions that are subject to the tax imposed by the Code, Section 
72(t); 
Sec. 2.  36 MRSA §5122, sub-§2, ¶M-2, as enacted by PL 2015, c. 267, Pt. DD, 
§10, is amended to read: 
M-2.  For tax years beginning on or after January 1, 2016: 
(1)  For each individual who is a primary recipient of retirement plan benefits, the 
reduction is the sum of: 
(a)  Excluding military retirement plan benefits, an amount that is the lesser 
of the aggregate of retirement plan benefits under employee retirement plans 
or individual retirement accounts included in the individual’s federal adjusted 
gross income and the pension deduction amount.  The amount claimed under 
this division must be 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; and: 
(i)  The aggregate of retirement plan benefits under employee retirement 
plans or individual retirement accounts included in the individual’s 
federal adjusted gross income; and 
(ii)  The pension deduction amount 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; and 
(b) An amount equal to the aggregate of retirement benefits under military 
retirement plans included in the individual’s federal adjusted gross income; 
and 
(2)  For purposes of this paragraph, the following terms have the following 
meanings. 
(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. 
(b)  "Individual retirement account" means an individual retirement account 
under Section 408 of the Code, a Roth IRA under Section 408A of the Code, 
a simplified employee pension under Section 408(k) of the Code or a simple 
retirement account for employees under Section 408(p) of the Code. 
(c)  "Military retirement plan" means retirement plan benefits received as a 
result of service in the active or reserve components of the Army, Navy, Air 
Force, Marines or Coast Guard. 
(d)  "Pension deduction amount" means $10,000 for tax years beginning in 
2014. 
(e)  "Primary recipient" means the individual upon whose earnings or 
contributions the retirement plan benefits are based or the surviving spouse of 
that individual. 
(f)  "Retirement plan benefits" means employee retirement plan benefits, 
except pick-up contributions for which a subtraction is allowed under 
paragraph E, reported as pension or annuity income for federal income tax 
purposes and individual retirement account benefits reported as individual 
retirement account distributions for federal income tax purposes.  
"Retirement plan benefits" does not include distributions that are subject to 
the tax imposed by the Code, Section 72(t); 
Sec. 3.  36 MRSA §5122, sub-§2, ¶BB, as amended by PL 2015, c. 300, Pt. A, 
§40, is further amended to read: 
BB.  The amount of pension benefits to the extent included in federal adjusted gross 
income under a military retirement plan as defined in paragraph M or, M-1 or M-2 
that exceed the amount of military retirement plan pension benefits deducted under 
paragraph M or, M-1 or M-2 and that are received by a person who practices as a 
licensed dentist in this State for an average of at least 20 hours per week during the 
tax year and who accepts patients who receive benefits under the MaineCare program 
administered under Title 22, chapter 855;  
Sec. 4.  Retroactivity.  That section of this Act that amends the Maine Revised 
Statutes, Title 36, section 5122, subsection 2, paragraph M-1 applies retroactively to June 
30, 2015. 
Emergency clause.  In view of the emergency cited in the preamble, this 
legislation takes effect when approved. 
SUMMARY 
This bill makes the following changes to the Maine tax laws. 
1.  It corrects an inadvertent change made by Public Law 2015, chapter 267 to the 
individual income tax pension deduction for tax years beginning in 2014 and 2015 that, 
without this correction, would result in a requirement that military pensions be offset by 
social security benefits and railroad retirement benefits received by the taxpayer during 
the taxable year.  The law prior to the change by Public Law 2015, chapter 267 did not 
require the social security benefits and railroad retirement benefits offset.  This change is 
retroactive to June 30, 2015, the effective date of Public Law 2015, chapter 267. 
2.  It clarifies the offset of social security and railroad retirement benefits in 
calculating the pension income deduction for tax years beginning on or after January 1, 
2016. 
3.  It removes an incorrect reference to "tax years beginning in 2014" that appears in 
the individual income tax pension deduction provision that applies to tax years beginning 
after 2015. 
4.  It updates references to the statutory provisions governing the pension deduction 
in order to reflect recent changes.