February 15, 1977
You request a ruling with respect to the Massachusetts tax consequences of certain "rollover contributions" to the ********** (the "Plan"). The Plan is a "Keogh" or "HR-10" Plan, which will create a profit-sharing trust qualified under Section 401 of the Internal Revenue Code of 1954, as amended (the "Code"). It is understood that the Plan would have qualified under Section 401 of the Internal Revenue Code as amended on January 1, 1971, were it then in existence.
The Plan will cover individuals defined as "employees" under Section 401 (c)(1) of the Code. The Plan will also accommodate "rollover contributions" as defined in Sections 402 (a) (5), 403 (a) (4), 408 (d) (3) and 409 (b) (3) (c) of the Code as amended and in effect for the taxable year.
Individuals who make a "rollover contribution" from an Individual Retirement Account pursuant to Section 408 (d) (3) of the Code, or of monies invested in Retirement Bonds pursuant to Section 409 (b) (3) (c) of said Code, incur no Massachusetts tax liability as they received no deduction under Massachusetts law for contributions to the Individual Retirement Account or for the purchase of the Retirement Bonds, nor any special exemption for income derived from these sources.
Based on the foregoing, it is ruled:
Massachusetts gross income will not be realized when a "rollover contribution" is made pursuant to Sections 402 (a) (5) or 403 (a) (4) of the Code from a stock bonus, pension or profit sharing trust qualifying under the Code Section 401, as amended on January 1, 1971, to another similarly qualified plan, provided the taxpayer is a mere conduit in receiving the lump-sum distribution for purposes of "rollover".
This ruling is to be strictly construed and does not apply to any "rollover contribution" into an Individual Retirement Account as defined in Section 408 of the Code, nor for purchase of Retirement Bonds as defined in Section 409 of said Code.
Very truly your,
/s/Owen L. Clarke
Owen L. Clarke
Commissioner of Corporations