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I received a lump-sum payout from a SERP (non-qualified Supplementary

Pension Plan) in 2009. The W2...
I received a lump-sum payout from a SERP (non-qualified Supplementary Pension Plan) in 2009.
The W2 I used (provided by Fidelity) showed no income for State purposes and that was my filing basis.
PA has challenged my filing and stating the payout is ordinary income which will attract PA taxes.
Can you advise how I best respond to PA Department of Revenue?
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Answered in 38 minutes by:
6/3/2010
Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
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Assuming the plan does not consist of any elective deferrals that you made via salary deductions, then the lump sum will be subject to PA income taxes. If you made any elective deferrals to the plan then those amounts could be recovered tax-free.

 

You could attach a statement to your response explaining that you did not report the income as it was not properly reported on your W-2 and request that the late penalties be abated.

 

The links below explain PA's treatment of nonqualified deferred compensation:

 

http://www.portal.state.pa.us/portal/server.pt/community/personal_income_tax/11409/new_rules_on_nonqualified_deferred_compensation_plans/580649

 

https://revenue-pa.custh elp.com/cgi-bin/revenue_pa.cfg/php/enduser/std_adp.php?p_faqid=999&p_created=1051280803&p_sid=JOYc8t1k&p_accessibility=0&p_redirect=&p_lva=&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX3Jvd19jbnQ9MSwxJnBfcHJvZHM9JnBfY2F0cz0wJnBfcHY9JnBfY3Y9JnBfc2VhcmNoX3R5cGU9YW5zd2Vycy5zZWFyY2hfbmwmcF9wYWdlPTEmcF9zZWFyY2hfdGV4dD1ub25xdWFsaWZpZWQ*&p_li=&p_topview=1

 

See pages 7-52 through 7-55 of the PIT guide referenced in the link above.

Bill
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Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
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