Pension Distribution Tax Question

[Brad W]

My tax advisor on the mainland called today to tell me he believes government pension distributions are not taxable by the State of Hawaii. Can anyone shed some light on this? Mahalo.

[Brad W]

Did some research online, called the tax folks, answered my own question. Pension disributions from accounts wholly funded by government are not subject to Hawaii State tax. What a country!

[oink]

Can you post any links that explain it. What does wholly funded mean? Many if not all governments reinvest the pension funds and pay out of the earnings. I assume that would still be considered wholly funded. It will be an issue for me.

Pua`a
S. FL
Big Islander to be.

[Jared I]

Which govt???

[oink]

I obviously wasn't talking about Uncle Sam. I believe most state and local governments invest their pension funds in various markets including, ouch NASDAQ.

Pua`a
S. FL
Big Islander to be.

[Robin C]

Employer-funded pensions are not taxed by HI. This includes government (state, etc) pensions as well as private (company) pensions.
HI does tax retirement plans funded by the employee, such as 401k or IRA.
Check the N-11 or N-15 booklets for verification.

Robin

[oink]

Robin,
Thanks for the info.

Pua`a
S. FL
Big Islander to be.

[Brad W]

Robin said it better than I. The question of private pensions did not come up in my research nor in my conversation with the tax people because it doesn't apply to me. It's called pension exclusion, and there is a list of ineligible examples in Tax Information Release #96-5.