Was a qualifying lump-sum retirement distribution taxable to a Louisiana resident when it was excluded from federal adjusted gross income?

Plain-English summary

A qualifying lump-sum distribution was not included in Louisiana tax-table income to the extent it was properly excluded from federal adjusted gross income. Louisiana made no separate modification that added the distribution back.

How the ruling reached that result

For this ruling, a lump-sum distribution used the definition in IRC § 402(e)(4)(D)(i). The ruling noted that such distributions often occurred from qualified pension or profit-sharing plans when a covered employee retired or died.

Louisiana individual income tax began with tax-table income. Under La. R.S. 47:293, the adjusted-gross-income component was the amount reportable on the individual's federal income-tax return.

Because Louisiana had no modification for lump-sum distributions, an amount properly left out of federal adjusted gross income was also left out of Louisiana tax-table income.

Common questions

Q: Did the ruling exempt every retirement-plan distribution?

A: No. It addressed lump-sum distributions within the cited federal definition and only the portion not properly includable in federal adjusted gross income.

Q: Did Louisiana provide a separate subtraction in this ruling?

A: No. The result followed from beginning with federal adjusted gross income and having no Louisiana modification for the distribution.

Q: Could an amount included in federal adjusted gross income still be excluded under this ruling?

A: The ruling did not say so. Its conclusion was limited to amounts not properly includable in federal adjusted gross income.

Citations and references

• IRC § 402(e)(4)(D)(i) — lump-sum distribution definition used by the ruling
• La. R.S. 47:293 — adjusted gross income for Louisiana individual income tax
• LAC 61:III.101(C) — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 01-002

Original ruling text

Revenue Ruling
No. 01-002
May 18, 2001
Individual Income Tax
Certain Lump Sum Distributions Not Taxable
This Revenue Ruling addresses the taxation of lump sum distributions paid to a Louisiana domiciliary for state income tax purposes. For purposes of this ruling, a lump sum distribution is defined as provided by IRC 402(e)(4)(D)(i). Such distributions often occur from qualified pension or profit sharing plans upon the retirement or death of a covered employee. Louisiana individual income tax is based on tax table income. The computation of tax table income begins with federal adjusted gross income and makes certain modifications. The Louisiana Revised Statutes, Title 47, Section 293 defines adjusted gross income as the adjusted gross income of the individual for the taxable year that is reportable on the individual’s federal income tax return. No modifications are made for lump sum distributions. To the extent that lump sum distributions are not properly includable in the federal adjusted gross income, such distributions are not included in tax table income.

Cynthia Bridges
Secretary
By:

_________
William (Mac) E. Little
Attorney
Policy Services Division

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is issued under Section 61:III.101(C) of the Louisiana Administrative Code to apply principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on the public. It is a statement of the department's position and is binding on the department until superseded or modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.