Exceptions to MI Retirement Subtraction

There are a few misconceptions about what can be deducted as retirement income on the MI return. And, of course, fewer of us in MI that can be deduct ANY retirement income. But for those that can, these retirement benefits CANNOT be subtracted on the MI return.

457 plans: Generally reported on 1099Rs, the are wage deferral plans from government or non-profits.

Private Annuities: Not deductible for taxpayers under age 65 or those 65 and older who do not take distributions over their lifetime. 1099Rs will not distinguish these from pensions.

Any Early Distributions from Pensions or IRAs: unless one meets an exception.

Section 401K: Not deductible if there is no matching contributions.

403(B) Plans: Generally offered by schools and referred to as “tax sheltered annuities,” they are fully taxable to MI.

Pensions/IRAs over the limit for the tax year.

MI is starting to watch these areas closely, so it pays for taxpayers to do so as well.


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