Columns below:

  • Contributions to a pension or retirement fund are amounts paid into funds by either employees or by their employers on their behalf. Contributions usually have limits based on participants' compensation. Individuals with IRAs also make contributions.
  • Mass vs. Federal Wages at time of Contribution
  • Distributions from a pension or retirement fund are amounts paid out of the fund to employees who have separated from their employment. Distributions usually have time limits based on age and definition of plan. Individuals with IRAs also receive distributions.

Income earned on contributions while in an employee or individual pension or retirement fund is excluded from gross income;.

Massachusetts Only:

Retirement PlanContribution to Retirement PlanMass vs. Federal Wages at time of ContributionsDistribution (Income) from Retirement Plan
401(a) Profit Sharing Retirement Savings Plan Contribution is deferred/not taxableNo differenceIncome is fully taxable
401(k) Qualified Cash or Deferred Arrangement Plan - CODA Contribution is deferred/not taxableNo differenceIncome is fully taxable
403(b) TSA and TIAA-CREF Retirement Plan1998 forward, both mandatory and voluntary contributions are deferred/not taxable. Prior to 1998, only mandatory were deferred / not taxable1998 forward, no difference. Prior to 1998, Mass wage higher than federalIncome is taxable above Mass. previously taxed contributions prior to 1998
Bank Pension: Savings Bank, Credit Union, Co operative Bank Employee's Retirement AssociationContribution is deferred/not taxableMass wages may be lower than federalIncome is fully taxable
Designated Roth Accounts in Certain Retirement Plans (401(k), 403(b) and 457(b)Contribution is taxable (no deduction)No differenceGenerally, income is not taxable if certain requirements are met
Education Savings Account, Coverdell - CESA Contribution is taxable (no deduction)No differenceGenerally, income is not taxable if certain requirements are met
Federal Employee Contributory Pension PlanContribution is taxable (retirement deduction up to $2,000)No differenceIncome is not taxable
Federal Employee Thrift Savings Plan Contribution is deferred/not taxable Income is taxable
IRA, Roth Contribution is taxable (no deduction)No differenceGenerally, income is not taxable if certain requirements are met
IRA, Traditional Contribution is taxable (no deduction)No difference because IRA/Keogh contribution is a U.S. adjustment, not a reduction in wagesIncome is taxable above Mass previously taxed contributions
Pensions - GovernmentContribution is deferred/not taxableNo differenceIncome is fully taxable
Massachusetts Police or Fire Department Pension PlanContribution is taxable (retirement deduction up to $2,000)Mass wages are higher than federalIncome is not taxable
Massachusetts State and Local Employee Contributory Pension PlanContribution is taxable (retirement deduction up to $2,000)Mass wages are higher than federal after January 12, 1988Income is not taxable
MBTA Pension PlanContribution is taxable (retirement deduction up to $2,000)Mass wages are higher than federalIncome is not taxable
Out-of-State Employee Contributory Pension PlanContribution is taxable (no deduction)N/AIncome is included but some or all may be deducted depending on the other state's treatment of Mass pensions
Railroad Pension, Tier I and II Contribution is taxable (retirement deduction up to $2,000)No differenceIncome is included but some or all may be deducted depending on the other state's treatment of Mass pensions
Social Security/FICAContribution is taxable (deduction up to $2,000)No differenceIncome is not taxable regardless of amounts that may be subject to tax federally
SEP or SEP-IRA - Simplified Employee Pension PlanContribution is deferred/not taxable beginning in 1988No difference since 1988Income is taxable above Mass previously taxed contributions prior to 1988
SIMPLE Account - Savings Incentive Match Plan for Employees Contribution is deferred/not taxable beginning in 1998. Not allowed for Self-employed on own behalfNo difference since 1998Income is taxable above Mass previously taxed contributions prior to 1998
TSA and TIAA-CREF - 403(b) Retirement Plan1998 forward, both mandatory and voluntary contributions are deferred/not taxable. Prior to 1998, only mandatory were deferred / not taxable1998 forward, no difference. Prior to 1998, Mass wage higher than federalIncome is taxable above Mass previously taxed contributions prior to 1998
U.S. Military Non-Contributory Pension Plan N/ANo differenceIncome is not taxable
Veteran's Pension Plan under G.L. s. 32, Sections 56-60 N/AN/AAt time of retirement, lump sum distribution is not taxable; subsequent to lump sum, amount is taxable

* This change took effect under the U.S. Tax Reform Act of 1986. SEP and SEP-IRAs were no longer under I.R.C. Section 219 and therefore amounts could be deferred under the Code of 1988.