An Act To Retain More Retirees in Maine
Maine Legislature, Session 127, LD 1070
Committee: Taxation
Sponsors: SCHNECK, BURNS, DAVIS, HAMPER, KATZ, BLACK, HILLIARD
Amends: 36 MRSA §4102, 36 MRSA §5122

Legislative Document 
No. 1070 
S.P. 373 
In Senate, March 24, 2015 
An Act To Retain More Retirees in Maine 
Reference to the Committee on Taxation suggested and ordered printed. 
HEATHER J.R. PRIEST 
Secretary of the Senate 
Presented by Representative SCHNECK of Bangor. 
Cosponsored by Senators: BURNS of Washington, DAVIS of Piscataquis, HAMPER of 
Oxford, KATZ of Kennebec, Representatives: BLACK of Wilton, HILLIARD of Belgrade. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §4102, sub-§5, as enacted by PL 2011, c. 380, Pt. M, §9, is 
repealed and the following enacted in its place: 
5.  Maine exclusion amount.  "Maine exclusion amount" means: 
A.  For deaths occurring  before January 1, 2015, $2,000,000; 
B.  For deaths occurring in 2015,  $3,000,000; 
C.  For deaths occurring in 2016, $4,000,000; 
D.  For deaths occurring in 2017, $5,000,000; and 
E.  For deaths occurring on or after January 1, 2018, an amount equal to the 
applicable federal exclusion amount. 
Sec. 2.  36 MRSA §5122, sub-§2, ¶M-1, as amended by PL 2013, c. 546, §13, is 
further amended to read: 
M-1.  For tax years beginning on or after January 1, 2014, and before January 1, 
2015, 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, 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.   
(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. 3.  36 MRSA §5122, sub-§2, ¶M-2 is enacted to read: 
M-2.  For tax years beginning on or after January 1, 2015 and before January 1, 2018, 
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.  For tax years beginning on or after 
January 1, 2018, 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 aggregate of retirement plan benefits under employee retirement 
plans or individual retirement accounts included in the individual's federal adjusted 
gross income. 
For purposes of this paragraph, the following terms have the following meanings. 
(1)  "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. 
(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)  "Pension deduction amount" means $10,000 for tax years beginning in 2015, 
$25,000 for tax years beginning in 2016 and $40,000 for tax years beginning in 
2017. 
(4)  "Primary recipient" means the individual upon whose earnings or 
contributions the retirement plan benefits are based or the surviving spouse of 
that individual. 
(5) "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. 4.  36 MRSA §5122, sub-§2, ¶HH, as amended by PL 2013, c. 331, Pt. C, 
§32, is further amended to read: 
HH.  To the extent included in federal adjusted gross income, annuity payments made 
to the survivor of a deceased member of the military who died as the result of service 
in active or reserve components of the United States Army, Navy, Air Force, Marines 
or Coast Guard under a survivor benefit plan or reserve component survivor benefit 
plan pursuant to 10 United States Code, Chapter 73 reduced by any amount claimed 
as a modification under paragraph M or, M-1 or M-2;  
SUMMARY 
This bill reduces taxes for retirees by phasing out over 4 years the income tax on 
retirement benefit plan and individual retirement account benefits.  The bill also phases in 
over 4 years complete conformity of the Maine estate tax with the exclusion amount 
under the federal estate tax.