Pro Rata Rule at State Level
Massachusetts does not allow deductions for IRAs, SEPs, etc. creating an after tax issue at the state level. DO you know if MA follows the same pro-rata rules on distributions?
Massachusetts does not allow deductions for IRAs, SEPs, etc. creating an after tax issue at the state level. DO you know if MA follows the same pro-rata rules on distributions?
Permalink Submitted by Alan - IRA critic on Tue, 2013-01-08 22:13
No. At the state level MA allows recovery of the non deductible contributions in total before anything is taxable. Therefore, while MA requires accumulation of much more basis than federal, the taxpayer recovers the basis much faster at the state level when distributions begin than they recover federal basis under the pro rate rules per Form 8606. See the following:http://www.mass.gov/dor/individuals/filing-and-payment-information/guide-to-personal-income-tax/forms-schedules-and-worksheets/worksheet-examples/taxable-irakeogh-plan-qualified-charitable.html