Sec. 1. 36 MRSA §5122, sub-§2, śM, as amended by PL 2001, c. 396, §34 and affected by §50, is further amended to read:

M. An amount, for each recipient of benefits under an employee retirement plan, that is the lesser of:

(1) Six thousand dollars reduced by the total amount of the primary recipient's social security benefits and railroad retirement benefits paid by the United States, but not less than $0. The reduction does not apply to benefits paid under a military retirement plan or under the Maine State Retirement System; or

(2) The aggregate of benefits received by the primary recipient under employee retirement plans and included in federal adjusted gross income.

For purposes of this paragraph, "employee retirement plan" means a state, federal or military retirement plan or any other retirement benefit plan established and maintained by an employer for the benefit of its employees under Section 401(a), Section 403 or Section 457(b) of the Code. "Employee retirement plan" does not include an individual retirement account under Section 408 of the Code, a Roth IRA under Section 408A of the Code, a rollover individual retirement account, a simplified employee pension under Section 408(k) of the Code or an ineligible deferred compensation plan under Section 457(f) of the Code. For purposes of this paragraph, "military retirement plan" means benefits received as a result of service in the active or reserve components of the Army, Navy, Air Force, Marines or Coast Guard;

Sec. 2. Application. This Act applies to tax years beginning on or after January 1, 2004.

SUMMARY

Current law exempts from the state income tax the first $6,000 of income received from certain public, private and military pensions; this amount is reduced by the total amount of social security and railroad benefits received, except for military pensions.

This bill exempts from the social security benefit offset benefits received under the Maine State Retirement System.