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Maryland Pension Exclusion
Old 01-04-2016, 03:57 PM   #1
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Maryland Pension Exclusion

Evening - I was hoping to touch base with those retired living in Maryland concerning the Maryland Pension Exclusion calculation.

We recently moved my DW's 403 pension out to a traditional IRA. This was done cause she was retiring and we wanted to have less financial institutions to deal with but more importantly to reduce fees and have better investment choices.

I was told today that IRAs are not used in the Maryland Pension Exclusion calculation but that 401/403/TSP are. Now I am wondering what is the impact on Maryland taxable income.

From the Maryland Pension Exclusion worksheet it tells to take the lesser of "net taxable pension and retirement annuity" or the difference between the Maryland maximum allowable exclusion ($29,200) and Social Security benefits.

My wife and I don't plan to take SS till age 67 and at that time my estimate is that we will be be within a few thousands (approx $4k for each of us) of the Maryland maximum allowable exclusion. As federal employees our pension will be well above the Maryland allowable exclusion.

So my question is does the rollover from a 403b to a traditional IRA really have any significant impact? Was hoping for Maryland retirees with both SS and employer pension would have real world experience.

My simple mind says that the "lesser" will always be the Allowable Exclusion minus our SS benefits which in general will not be that much after all.



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Old 01-04-2016, 08:57 PM   #2
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Join Date: Aug 2004
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I am not sure I follow your logic, but we will be in a similar situation and that is one more reason I have retained my 401k from former employers. I think I agree that once you file for SS it may not be significant but what about the years between 65-67? I would use the worksheet (or TurboTax) to do some what-if exercises to see how it impacts your situation.

If you are Federal employees, can't you roll the IRA into the TSP?
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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