Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 40 - Determination of Net Income › Rule 701-40.45 - Exemption for Distributions From Pensions, Annuities, Individual Retirement Accounts, or Deferred Compensation Plans Received by Nonresidents of Iowa

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years beginning on or after January 1, 1994, a
				  distribution from a pension plan, annuity, individual retirement account, or
				  deferred compensation plan which is received by a nonresident of Iowa is exempt
				  from Iowa income tax to the extent the distribution is directly related to the
				  documented retirement of the pensioner, annuitant, owner of individual
				  retirement account, or participant in a deferred compensation arrangement. For
				  tax years beginning on or after January 1, 1996, distributions of nonqualified
				  retirement benefits which are paid by a partnership to its retired partners and
				  which are received by a nonresident of Iowa are exempt from Iowa income tax to
				  the extent the distribution is directly related to the documented retirement of
				  the partner In a situation where the pensioner, annuitant, owner of the
				  individual retirement account, or participant of a deferred compensation
				  arrangement dies before the date of documented retirement, any distribution
				  from the pension, annuity, individual retirement account, or deferred
				  compensation arrangement will not be taxable to the beneficiary receiving the
				  distributions if the beneficiary is a nonresident of Iowa. If the pensioner,
				  annuitant, owner of the individual retirement account, or participant of a
				  deferred compensation arrangement dies after the date of documented retirement,
				  any distributions from the pension, annuity, individual retirement account, or
				  deferred compensation arrangement will not be taxable to a beneficiary
				  receiving distributions if the beneficiary is a nonresident of Iowa.
For purposes of this rule, the distributions from the
				  pensions, annuities and deferred compensation arrangements were from pensions,
				  annuities, and deferred compensation earned entirely or at least partially from
				  employment or self-employment in Iowa. For purposes of this rule, distributions
				  from individual retirement arrangements were from individual retirement
				  arrangements that were funded by contributions from the arrangements that were
				  deductible or partially deductible on the Iowa income tax return of the owner
				  of the individual retirement accounts.
The following subrules include definitions and examples which
				  clarify when distributions from pensions, annuities, individual retirement
				  accounts, and deferred compensation arrangements are exempt from Iowa income
				  tax, when the distributions are received by nonresidents of Iowa:
(1)
Definitions.
a. The word "beneficiary" means an individual
				who receives a distribution from a pension or annuity plan, individual
				retirement arrangement, or deferred compensation plan as a result of either the
				death or divorce of the pensioner, annuitant, participant of a deferred
				compensation arrangement, or owner of an individual retirement
				account.
b. The term "individual's
				documented retirement" means any evidence that the individual can provide to
				the department of revenue which would establish that the individual or the
				individual's beneficiary is receiving distributions from the pension, annuity,
				individual retirement account, or the deferred compensation arrangement due to
				the retirement of the individual.
Examples of documents that would establish an individual's
				  retirement may include: copies of birth certificates or driver's licenses to
				  establish an individual's age; copies of excerpts from an employer's personnel
				  manual or letter from employer to establish retirement or early retirement
				  policies; a copy of a statement from a physician to establish an individual's
				  disability which could have contributed to a person's retirement.
c. The term "nonresident" applies
				only to individuals and includes all individuals other than those individuals
				domiciled in Iowa and those individuals who maintain a permanent place of abode
				in Iowa. See 701-subrule 38.17(2) for the definition of domicile.