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

                                  7781

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                              May 27, 2015
                               ___________

Introduced by M. of A. PAULIN -- read once and referred to the Committee
  on Ways and Means

AN  ACT to amend the tax law, in relation to lump sum distributions used
  for the payment of post-secondary education loans

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

  Section  1.  Section  603  of  the  tax law is amended by adding a new
subsection (c) to read as follows:
  (C) EXEMPTION. LUMP SUM DISTRIBUTIONS, AS TAXED  UNDER  THIS  SECTION,
USED  FOR  PAYMENTS  TO  AN INSTITUTION RECEIVING ANY SCHEDULED PERIODIC
PAYMENTS FROM A BORROWER PURSUANT TO THE  TERMS  OF  ANY  POST-SECONDARY
EDUCATION  LOAN,  AND  MAKING THE PAYMENTS OF PRINCIPAL AND INTEREST AND
OTHER AMOUNTS WITH RESPECT TO THE AMOUNTS RECEIVED FROM THE BORROWER  AS
MAY  BE  REQUIRED  PURSUANT TO THE TERMS OF THE POST-SECONDARY EDUCATION
LOAN OR OF THE CONTRACT GOVERNING THE SERVICING;  OR,  DURING  A  PERIOD
WHEN PAYMENT ON A POST-SECONDARY EDUCATION LOAN IS DEFERRED, MAINTAINING
ACCOUNT RECORDS FOR THE LOAN AND COMMUNICATING WITH THE BORROWER REGARD-
ING THE LOAN, ON BEHALF OF THE LOAN'S HOLDER SHALL NOT BE SUBJECT TO THE
SEPARATE TAX IMPOSED IN SUBSECTION (A) OF THIS SECTION.
  S 2. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 3-d to read as follows:
  (3-D) PENSIONS AND ANNUITIES RECEIVED BY AN INDIVIDUAL OF ANY AGE, NOT
OTHERWISE  EXCLUDED  PURSUANT  TO PARAGRAPH THREE OF THIS SUBSECTION, TO
THE EXTENT INCLUDIBLE IN GROSS INCOME FOR FEDERAL  TAX  PURPOSES,  WHICH
ARISE  (I)  FROM AN EMPLOYER-EMPLOYEE RELATIONSHIP OR (II) FROM CONTRIB-
UTIONS TO A RETIREMENT PLAN WHICH ARE DEDUCTIBLE FOR FEDERAL INCOME  TAX
PURPOSES  WHICH  ARE  USED  FOR PAYMENTS TO AN INSTITUTION RECEIVING ANY
SCHEDULED PERIODIC PAYMENTS FROM A BORROWER PURSUANT TO THE TERMS OF ANY
POST-SECONDARY EDUCATION LOAN, AND MAKING THE PAYMENTS OF PRINCIPAL  AND
INTEREST AND OTHER AMOUNTS WITH RESPECT TO THE AMOUNTS RECEIVED FROM THE
BORROWER AS MAY BE REQUIRED PURSUANT TO THE TERMS  OF THE POST-SECONDARY

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10306-02-5
              

A. 7781                             2

EDUCATION  LOAN OR OF THE CONTRACT GOVERNING THE SERVICING; OR, DURING A
PERIOD WHEN PAYMENT ON A  POST-SECONDARY  EDUCATION  LOAN  IS  DEFERRED,
MAINTAINING  ACCOUNT  RECORDS  FOR  THE  LOAN AND COMMUNICATING WITH THE
BORROWER  REGARDING  THE  LOAN, ON BEHALF OF THE LOAN'S HOLDER. HOWEVER,
THE TERM "PENSIONS AND ANNUITIES" SHALL ALSO  INCLUDE  DISTRIBUTIONS  OF
ANY  KIND,  INCLUDING ANY LUMP SUM DISTRIBUTIONS, AS DEFINED IN SUBPARA-
GRAPH (A) OF PARAGRAPH FOUR OF SUBSECTION (E) OF  SECTION  FOUR  HUNDRED
TWO  OF  THE  INTERNAL  REVENUE CODE AND TAXED UNDER SECTION SIX HUNDRED
THREE OF THIS ARTICLE, RECEIVED BY AN INDIVIDUAL  OF  ANY  AGE  FROM  AN
INDIVIDUAL  RETIREMENT  ACCOUNT  OR AN INDIVIDUAL RETIREMENT ANNUITY, AS
DEFINED IN SECTION FOUR HUNDRED EIGHT OF THE INTERNAL REVENUE CODE,  AND
DISTRIBUTIONS  RECEIVED  BY  AN INDIVIDUAL OF ANY AGE FROM SELF-EMPLOYED
INDIVIDUAL AND  OWNER-EMPLOYEE  RETIREMENT  PLANS  WHICH  QUALIFY  UNDER
SECTION  FOUR  HUNDRED  ONE OF THE INTERNAL REVENUE CODE, WHETHER OR NOT
THE PAYMENTS ARE PERIODIC IN NATURE.
  S 3. This act shall take effect immediately and shall apply to taxable
years commencing on or after January 1, 2014.