The Department of Taxation has amended section 18-235-7-03(c), HRS, effective January 1, 1998, to clarify that pension plan distributions beginning in 1998 are exempt from the Hawaii income tax when the distributions are attributable to certain employer contributions. The amended rule exempts distributions attributable to employer contributions, notwithstanding the employer's choice of entity for doing business (i.e., sole proprietorships, S corporations, partnerships, and limited liability companies). Elective contributions where the individual has the choice of receiving compensation as current income or funding a retirement account (e.g., personal contributions to a 401(k) plan), however, will continue to be taxable.
RE: Adoption of Amendments to Section 18-235-7-03(c), Hawaii Administrative Rules (HAR), Relating to the Taxation of Pensions Under the Hawaii Income Tax Law
To request a copy of the rules, please call the Department of Taxation, forms Request Line at (808) 587-7572 or toll free at (800) 222-7572 and select the "mail" option. You will be asked to leave your name, address, and the type of document you need (i.e., pension rules).
RAY K. KAMIKAWA
Director of Taxation
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