California non-conformance

[Guest bandorp]

Does anyone have any information/source material on California's reported non-conformance with recent federal changes on IRA and 401K deductions? Any advice on how to manage the state/federal discrepancy, potential problems and liabilities, prospects and/or timing of change at the state level etc.? Why am I seeing virtually no information on this problem?

[Kirk Maldonado]

There have been articles on this topic in the Orange County Register and the Los Angeles Times.

[Guest reg_h2b]

As regard to some EGTRRA pension changes, I've been told:

In California, several legislators are exploring ways of conforming only partially with EGTRRA, in order to minimize the cost. IF true it's possible that some California employers will need to separately report certain pension contributions and withholding on different amounts for State and Federal income tax purposes.

[Mary Kay Foss]

There is a good article on this issue in the October 1 edition of Spidell's California Taxletter. The chair of the Assembly Revenue and Taxation Committee and the Senate Committee on Revenue and Taxation are sponsoring a meeting with interested parites January 17 from 1 to 4 p.m. at the State Capitol. The two chairs had solicited comments for "partial conformity" that were to have been submitted by Dec. 17.

We're hoping that this is resolved soon. We've heard that some of the larger employers are not implementing the EGTRRA changes until the matter is clarified.

In a radio interview in LA yesterday, the assembly speaker supposedly said that CA should use its limited resources on education rather than conformity. I don't think our reps in Sacramento really understand the problem. If they thought there was an exodus of business out of California in the 90s, this could cause a greater one.

[Guest mpedroza]

...FYI, a pretty informative article on this subject dealing with some of your questions was in the LA TIMES this last Sunday, Jan. 06, 2002...I think we're all mostly sitting tight in the mean time to see what transpires.

[Dave Baker]

See also this thread:

http://benefitslink.com/boards/index.php?showtopic=12958

[BPickerCPA]

Being a New Yorker, I don't have much to add, but I did see a statement in an accounting newspaper which stated that some employers are not permitting the higher deductions to avoid the problems with the state.

I also saw a statement that some plans will that do allow the higher limits will be in violation of state law and that the plan could be disqualified. That's BULL. The plans are qualified under FEDERAL law and will remain so, no matter how any state treats the contributions for state income tax purposes.