Subtraction for certain retirement distributions contributed to retirement plan during period of nonresidency
- substantiation rules
(1)Intentionally left blank —Ed.
(a)In addition to other modifications to federal taxable income contained in this chapter, there shall be subtracted from federal taxable income of a resident individual the distributions received by the individual from a plan or trust described under subsection (2) of this section to the extent that:
(A)The distributions consist of contributions made in a tax period during which the individual was a nonresident; and
(B)The distributions consist of contributions made in a tax period for which no deduction, exclusion or exemption for the contributions was allowed or allowable to the individual for purposes of a state personal net income tax imposed during the period by the state of which the individual was a resident; and
(C)No deduction, exclusion, subtraction or other tax benefit has been allowed for the distributions by another state before the individual becomes a resident of this state.
(b)For purposes of this section, if any distributions (lump sum or periodic) received by a resident individual from a plan or trust described in subsection (2) of this section meet the requirements of paragraph (a) of this subsection, then for purposes of the subtraction allowed by this section, those distributions shall be considered to be the distributions first received by the individual after the individual has become a resident of this state.
(c)For purposes of ORS 316.082 (Credit for taxes paid another state) (credit for taxes paid to another state), any distributions received by a resident individual from a plan or trust described in subsection (2) of this section which meet the requirements of paragraph (a) of this subsection shall be considered income subject to tax under this chapter notwithstanding the exclusion under this section.
(2)A plan or trust is described in this section if:
(a)The plan or trust is an individual retirement account described in section 408 of the Internal Revenue Code;
(b)The trust forms part of a pension or profit-sharing plan that provides contributions or benefits for employees, some or all of whom are owner-employees, as defined under section 401(c)(3) of the Internal Revenue Code;
(c)The plan or trust is an annuity contract purchased on behalf of an employee of a charitable organization or public school as described under section 403(b) of the Internal Revenue Code; or
(d)The plan or trust is an eligible deferred compensation plan established and maintained by an employer that is a state or local government, a political subdivision thereof, or a tax exempt organization, on behalf of an employee of the employer, as described under section 457 of the Internal Revenue Code.
(3)The following contributions are not contributions to which the subtraction under subsection (1) of this section is accorded:
(a)Contributions made during a tax period, or portion thereof, for which the taxpayer was a nonresident required to file an Oregon return, to the extent that a deduction or exclusion was allowable under this chapter for those contributions; or
(b)Contributions for which the taxpayer was allowed a credit for taxes paid to another state under ORS 316.082 (Credit for taxes paid another state).
(4)A subtraction shall not be allowed under this section for interest or other income arising from investment of contributions made to a plan or trust described in subsection (2) of this section.
(5)For purposes of the subtraction allowed under subsection (1) of this section:
(a)Distributions received by the taxpayer from a plan or trust described in subsection (2) of this section shall be considered to initially consist of a recovery of contributions.
(b)Once the distributions equal the cumulative contributions, all further distributions shall constitute interest or other income arising from investment of the contributions.
(6)The Department of Revenue may adopt rules requiring substantiation of the contributions and tax treatment upon which the subtraction under this section is based. Failure to provide substantiation as required under the rules shall result in denial of the subtraction otherwise allowed under this section. The requirement for substantiation may be waived partially, conditionally or absolutely, as provided under ORS 315.063 (Waiver of substantiation by Department of Revenue). [1991 c.838 §2; 1995 c.54 §11; 1995 c.815 §6]
Section 316.159 — Subtraction for certain retirement distributions contributed to retirement plan during period of nonresidency; substantiation rules,
Notes of Decisions
Subtraction for plan or trust distributions that consist of contributions for which taxpayer was not granted deduction, exclusion or exemption applies only if contributions were subject to taxation by other state. Leaf v. Dept. of Revenue, 15 OTR 53 (1999)