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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