senate Bill S1066

2013-2014 Legislative Session

Grants a state personal income tax deduction for retirement plan distributions used to purchase long-term care insurance

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to investigations and government operations
Jan 09, 2013 referred to investigations and government operations

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S1066 - Bill Details

See Assembly Version of this Bill:
A4653
Current Committee:
Law Section:
Tax Law
Laws Affected:
Amd ยงยง612 & 606, Tax L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S228A, A4149A
2009-2010: S1397, A2155

S1066 - Bill Texts

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Grants a state personal income tax deduction for retirement plan distributions used to purchase long-term care insurance; exempts distributions from individual retirement accounts and individual retirement annuities from state personal income taxation when such distributions are used to purchase long-term health care insurance.

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BILL NUMBER:S1066

TITLE OF BILL:
An act
to amend the tax law, in relation to exempting distributions from
individual retirement accounts and individual retirement annuities from
state personal income taxation when such distributions are used to
purchase long-term health care insurance

PURPOSE:
Allows tax free withdrawals from retirement IRA's and
retirement annuities for the purchase of the premiums for long-term
care insurance.

SUMMARY OF PROVISIONS:
Section 1 amends section 612 of the tax law by
adding a new subsection 3-d which exempts distributions from
individual retirement accounts and individual retirement annuities
from state personal taxation when such distributions are used to
purchase long-term health care insurance.

JUSTIFICATION:
Planning for future long-term care needs is a goal that
New York State continues to support as a way to save Medicaid dollars
and as a way for individuals to be able to manage their own care and
improve outcomes. Different strategies and ideas need to be explored
to encourage individuals to think in advance and to plan for their
personal long-term care needs.

This legislation provides one more tool for individuals to accomplish
this goal by allowing retirement IRA's and retirement annuities to be
tapped tax free for the purpose of purchasing long-term care insurance.
Long-term care insurance can be prohibitively costly for some
individuals yet these individuals may have a retirement IRA or
retirement annuity that would afford them an opportunity to purchase
a long-term care insurance. Authorizing tax free withdrawals from
these accounts to cover the costs of long-term care insurance
premiums complies with the interest and goals of the state, and opens
up an avenue of planning and affording long-term care insurance
should one's monthly income not be sufficient to afford the premiums.

LEGISLATIVE HISTORY:
S.107/A.918 of 2007/2008: Referred to Senate
Investigations and Government Operations Committee.
S.1397/A.2155 of 2009/2010: Referred to Senate Investigations and
Government Operations Committee.
S.228A/A4149A of 2011/2012; Referred to Investigations and Government
Operations.

FISCAL IMPLICATIONS:

EFFECTIVE DATE:
Immediately and shall apply to taxable years
commencing on the first of January in the year in which the act shall
take effect.


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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  1066

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by Sens. MAZIARZ, BONACIC, DeFRANCISCO, LARKIN -- read twice
  and ordered printed, and when printed to be committed to the Committee
  on Investigations and Government Operations

AN ACT to amend the tax law, in relation to exempting distributions from
  individual retirement accounts  and  individual  retirement  annuities
  from  state  personal income taxation when such distributions are used
  to purchase long-term health care insurance

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Subsection (c) of section 612 of the tax law is amended by
adding a new paragraph 3-d to read as follows:
  (3-D) DISTRIBUTIONS RECEIVED BY AN INDIVIDUAL, NOT OTHERWISE  EXCLUDED
PURSUANT TO PARAGRAPH THREE OR THREE-A OF THIS SUBSECTION, TO THE EXTENT
INCLUDABLE  IN  GROSS  INCOME FOR FEDERAL INCOME TAX PURPOSES, WHICH ARE
ATTRIBUTABLE TO PERSONAL SERVICES  PERFORMED  BY  SUCH  INDIVIDUAL  FROM
EMPLOYMENT,  WHICH  ARISE  (I) FROM AN EMPLOYER-EMPLOYEE RELATIONSHIP OR
(II) FROM CONTRIBUTIONS TO A RETIREMENT PLAN WHICH  ARE  DEDUCTIBLE  FOR
FEDERAL  INCOME  TAX PURPOSES, TO THE EXTENT SUCH DISTRIBUTIONS ARE USED
DURING THE TAXABLE YEAR TO PURCHASE A POLICY OF  LONG-TERM  CARE  INSUR-
ANCE,  AS  DEFINED  IN SECTION ELEVEN HUNDRED SEVENTEEN OF THE INSURANCE
LAW, FOR SUCH  INDIVIDUAL  OR  A  DEPENDENT  OF  SUCH  INDIVIDUAL.  SUCH
DISTRIBUTIONS  SHALL INCLUDE DISTRIBUTIONS FROM AN INDIVIDUAL RETIREMENT
ACCOUNT OR AN INDIVIDUAL RETIREMENT ANNUITY, AS DEFINED IN SECTION  FOUR
HUNDRED  EIGHT  OF  THE  INTERNAL  REVENUE  CODE, AND DISTRIBUTIONS FROM
SELF-EMPLOYED INDIVIDUAL AND OWNER-EMPLOYEE RETIREMENT PLANS WHICH QUAL-
IFY UNDER SECTION  FOUR  HUNDRED  ONE  OF  THE  INTERNAL  REVENUE  CODE.
PROVIDED,  HOWEVER,  THAT  ANY  DISTRIBUTIONS  EXCLUDED PURSUANT TO THIS
PARAGRAPH SHALL BE SUBTRACTED FROM THE TOTAL  AMOUNT  OF  PREMIUMS  PAID
WHEN  COMPUTING  THE  AMOUNT  OF ALLOWABLE CREDIT PURSUANT TO SUBSECTION
(AA) OF SECTION SIX HUNDRED SIX OF THIS ARTICLE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02081-01-3

S. 1066                             2

  S 2. Subsection (aa) of section 606 of the  tax  law,  as  amended  by
section  1  of  part  P of chapter 61 of the laws of 2005, is amended to
read as follows:
  (aa)  Long-term care insurance credit. (1) Residents. A taxpayer shall
be allowed a credit against the tax imposed by  this  article  equal  to
twenty percent of the premium paid during the taxable year for long-term
care  insurance,  PROVIDED  THAT  ANY  AMOUNT  SUBTRACTED  FROM  FEDERAL
ADJUSTED GROSS INCOME PURSUANT  TO  PARAGRAPH  THREE-D  OF  SECTION  SIX
HUNDRED  TWELVE  OF  THIS ARTICLE SHALL BE SUBTRACTED FROM THE AMOUNT OF
PREMIUM PAID DURING THE TAXABLE YEAR AND THE TWENTY PERCENT CREDIT SHALL
BE BASED UPON SUCH RECOMPUTED AMOUNT OF PREMIUM PAID.  In order to qual-
ify for such credit, the taxpayer's premium  payment  must  be  for  the
purchase  of or for continuing coverage under a long-term care insurance
policy that qualifies for such credit pursuant to section  one  thousand
one  hundred seventeen of the insurance law. If the amount of the credit
allowable under this subsection for any taxable year  shall  exceed  the
taxpayer's  tax  for  such  year,  the excess may be carried over to the
following year or years and may be deducted from the taxpayer's tax  for
such year or years.
  (2) Nonresidents and part-year residents. In the case of a nonresident
taxpayer  or  a part-year resident taxpayer, the credit determined under
this subsection shall be limited to the amount determined by multiplying
the amount of such credit by the New York source fraction as  set  forth
in  paragraph three of subsection (e) of section six hundred one of this
article. The credit as so limited shall be applied as provided in  para-
graph  one  of this subsection, PROVIDED THAT ANY AMOUNT SUBTRACTED FROM
FEDERAL ADJUSTED GROSS INCOME PURSUANT TO PARAGRAPH THREE-D  OF  SECTION
SIX HUNDRED TWELVE OF THIS ARTICLE AND SECTION SIX HUNDRED THIRTY-ONE OF
THIS  ARTICLE SHALL BE SUBTRACTED FROM THE AMOUNT OF PREMIUM PAID DURING
THE TAXABLE YEAR AND THE TWENTY PERCENT CREDIT SHALL BE BASED UPON  SUCH
RECOMPUTED AMOUNT OF PREMIUM PAID.
  S 3. This act shall take effect immediately and shall apply to taxable
years  commencing  on  January first in the year in which this act shall
take effect and all subsequent taxable years.

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