S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    59
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 4, 2017
                                ___________
 
 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.
   § 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD06349-01-7

 A. 59                               2
 
 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 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.
   § 3. This act shall take effect immediately and shall apply to taxable
 years commencing on or after January 1, 2016.