Governor Deval Patrick's Budget Recommendation - House 1 Fiscal Year 2014

1.101 -Net Exemption of Employer Contributions and Earnings of Private Pension Plans

Item DescriptionFY2012 FY2013 FY2014
1.101 Net Exemption of Employer Contributions and Earnings of Private Pension Plans2
Employer contributions to private, qualified employee pension plans are deductible by the employer up to certain amounts and are not included in the income of the employees. Income earned by the invested funds is not currently taxable to the employees. Benefits in excess of any employee contributions previously taxed by Massachusetts are taxable when paid out. The value of the tax deferral on contributions and on the investment income is a tax expenditure.

Origin:  IRC S. 401-415 in effect January 1, 1985 and M.G.L. c. 62 S. 2(a)(2)(F)
Estimate:  $1130
831.1 1013.2 1130


IRCFederal Internal Revenue Code (26 U.S.C.)
U.S.C United States Code
M.G.L. Massachusetts General Laws
Rev. Rul.; C.B. Revenue Ruling; Cumulative Bulletin of the U.S. Treasury
ESTIMATES All estimates are in $ millions.


2 2 This item and others citing this endnote cover contributory pension plans. The standard tax treatment of these plans is as follows: Component Standard Treatment Contributions: Made out of income that is currently taxed to employees. Investment Income: Taxed to the employee as "earned" income. Distributions from Pension Funds: Tax-free to the extent they are made out of dollars previously taxed to the employees as contributions or investment income. The non-standard treatment of contributions, investment income, or distributions as described in items 1.006, 1.101, 1.104, and 1.402, results in either nontaxation or deferrals of tax.

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