New Contribution Limits and State Taxes

[Christine Roberts]

Is it true that some states will not recognize, as deductions from state income taxes, the full amount of the new EGTRRA contribution limits?

Wouldn't ERISA preempt any contrary state income tax laws??

[david rigby]

ERISA pre-emption does not apply to taxation of income at the state level.

It is very likely that some states will not have brought their tax laws into agreement with EGTRRA. (This happens every time Congress makes a change.)

[Guest shafter]

You also have to be concerned that some or all of the new rollovers may be tax deferred at the federal level but not at the state level (among other things) The Fidelity memo regarding Massachusetts non-conforming issues is rather frightening. There has been a discussion of some of these issues on a catch-up contribution question also on this board.

[Guest merlin]

This has happened before. Back in the late 70's/early 80's New York did not recognize defined benefit Keogh plans (anyone remember them?). Any contributions in excess of $7500 were not deductible and had to be added back by the participant to his/her taxable income.

[Guest JB2]

Shafter -- do you have a copy of the Fidelity letter?

[Guest shafter]

Since, I am not confident of my ability to send you to add the address of another thread here, if you search on my name you will find another thread called catch up contributions where another user (belgarath) posted the documents.

[Dave Baker]

http://benefitslink.com/boards/index.php?showtopic=12214