Were employer-sponsored 403(b) retirement plans subject to Florida intangible personal property tax?

Plain-English summary

Florida concluded that the two 403(b) retirement plans were not subject to intangible personal property tax.

The married plan holders described employer-sponsored 403(b) plans that could be rolled into IRAs and followed IRA-style required-distribution timing. The Department characterized a 403(b) plan as an annuity contract under the Internal Revenue Code.

Florida's definition of money included the cash equivalent of annuities and life-insurance policies. Because section 199.185(1)(a) exempted money from both the annual and nonrecurring intangible taxes, the Department found the plans exempt.

What this means for you

• The result depended on the Department treating the 403(b) plans as annuity contracts.
• The exemption came from the statutory treatment of annuity cash value as money.
• The ruling addressed the described qualified retirement plans, not every investment held through a brokerage or retirement arrangement.

Common questions

Q: Were the 403(b) plans taxable?
A: No.

Q: Why did the money exemption apply?
A: Florida's definition of money included the cash equivalent of annuities, and the Department characterized the plans as annuity contracts.

Q: Did the exemption cover both annual and nonrecurring intangible tax?
A: Yes. The ruling said section 199.185(1)(a) exempted money from both.

Citations and references

• Fla. Stat. § 199.023 — definition of money
• Fla. Stat. § 199.185(1)(a) — money exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-062

Original ruling text

May 31, 1996

RE: Technical Assistance Advisement No. 96(C)2-062
Exemption from Intangible Personal Property Tax for 403B
Retirement Plans

Dear :

This is in response to your request for a Technical
Assistance Advisement dated February 14, 1996, with supplemental
information provided February 29, 1996.

Your correspondence states that you and your husband have
the major portion of your retirement funds in respective 403B
retirement plans. These plans are equivalent to 401K plans in
that they are set up by the employer. The sole difference is
that 403B plans are only available to employees of governmental
and non-profit institutions.

The 403B is a qualified retirement plan that can be rolled
over into an IRA, must be disbursed via the same percentage as
an IRA disbursement, beginning at the same time period (age 70
and 1/2), and is equivalent to 401K plans and rollover IRA's.

In response, a 403B plan is an annuity contract under the
Internal Revenue Code. The definition of "Intangible Personal
Property" under section 199.023, F.S., defines "Money" to
include, without limitation, United States legal tender,
certificates of deposit, cashier's and certified checks, bills
of exchange, drafts, the cash equivalent of annuities and life
insurance policies, and similar instruments, which are held by a
taxpayer, or deposited with or held by a banking organization or
any other person. Section 199.185(1)(a), F.S., exempts money
from the both the annual and nonrecurring taxes.

Since the 403B qualified retirement plans held by you and
your husband fall under the definition of "Money", they are not
subject to the Intangible tax.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Joy Eldred, C.P.A.
Tax Law Specialist
Tax Policy and Dispute Resolution
Office of General Counsel

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