View tax treatment of retirement plan contributions and distributions

Different types of retirement plans have their contributions and distributions treated differently in Massachusetts.

Updated: June 2, 2022

Definitions of columns:

• Contributions to a pension or retirement fund are amounts that employees (or employers on their behalf) pay into funds. Contributions are usually limited based on the participants' compensation. Those with IRAs also make contributions.
• MA vs. federal wages when contributing 
• Income from a retirement plan are distributions (amounts) paid out of the fund to employees who have separated from their employment. This income usually has time limits based on age and plan definition. Those with IRAs also get distributions.

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

For Massachusetts tax purposes

Retirement plan	Contribution to plan	MA vs. federal wages when contributing	Income from retirement plan
401(a) profit sharing retirement savings plan	Deferred/not taxable	No difference	Fully taxable
401(k) qualified cash or deferred arrangement plan - CODA	Deferred/not taxable	No difference	Fully taxable
403(b) TSA and TIAA-CREF retirement plan	1998 forward, both mandatory and voluntary contributions are deferred/not taxable. Before 1998, only mandatory were deferred/not taxable.	1998 onward, no difference. Before 1998, MA wages higher than federal	Taxable above MA previously taxed contributions prior to 1998
Savings Banks Employee's Retirement Association (SBERA)	Deferred/not taxable	MA wages may be less than federal	Fully taxable
Designated Roth accounts (401(k), 403(b) and 457(b))	Taxable (no deduction)	No difference	Generally not taxable if certain requirements are met
Coverdell Education Savings Account (CESA)	Taxable (no deduction)	No difference	Generally not taxable if certain requirements are met
Federal employee contributory pension plan	Taxable (retirement deduction up to $2,000)	No difference	Not taxable
Federal employee thrift savings plan	Deferred/not taxable		Taxable
Roth IRA	Taxable (no deduction)	No difference	Generally not taxable if certain requirements are met
Traditional IRA	Taxable (no deduction)	No difference	Taxable above MA previously taxed contributions
Government pensions	Deferred/not taxable	No difference	Fully taxable
Massachusetts police or fire department pension plan	Taxable (retirement deduction up to $2,000)	MA wages higher than federal	Not taxable
Massachusetts state and local employee contributory pension plan	Taxable (retirement deduction up to $2,000)	MA wages higher than federal after January 12, 1988	Not taxable
MBTA pension plan	Taxable (retirement deduction up to $2,000)	MA wages higher than federal	Not taxable
Out-of-state employee contributory pension plan	Taxable (no deduction)	N/A	Included but some or all may be deducted depending on other state's treatment of MA pensions
Tier I and II railroad pensions	Taxable (retirement deduction up to $2,000)	No difference	Included but some or all may be deducted depending on other state's treatment of MA pensions
Social Security/FICA	Taxable (deduction up to $2,000)	No difference	Not taxable, regardless of amounts that may be federally taxable
Simplified Employee Pension (SEP or SEP-IRA) plan	Deferred/not taxable beginning in 1988	No difference	Taxable above MA previously taxed contributions before 1988
Savings Incentive Match Plan for Employees (SIMPLE)	Deferred/not taxable beginning in 1998. Not allowed for self-employed.	No difference	Taxable above MA previously taxed contributions before 1998
TSA and TIAA-CREF - 403(b) retirement plan	1998 onward, both mandatory and voluntary contributions are deferred/not taxable. Before 1998, only mandatory were deferred/not taxable	1998 forward, no difference. Before 1998, MA wages higher than federal	Taxable above MA previously taxed contributions before 1998
U.S. military non-contributory pension plan	N/A	No difference	Not taxable
Veteran's pension plan	N/A	N/A	Lump sum when retiring is not taxable. Amounts afterwards are taxable.