NORTH CAROLINA GENERAL ASSEMBLY

1975 SESSION

 

 

CHAPTER 559

HOUSE BILL 664

 

 

AN ACT TO ALLOW DEDUCTIONS FOR INDIVIDUAL INCOME TAX PURPOSES FOR CONTRIBUTIONS TO INDIVIDUAL RETIREMENT ACCOUNTS, INDIVIDUAL RETIREMENT ANNUITIES, OR RETIREMENT BONDS WHICH ARE DEDUCTIBLE FOR FEDERAL INCOME TAX PURPOSES AND TO PROVIDE THE METHOD OF TAXING DISTRIBUTIONS FROM SUCH ACCOUNTS.

 

The General Assembly of North Carolina enacts:

 

Section 1.  G.S. 105-147(20) is hereby amended by inserting after the phrase "reasonable amounts paid by a self-employed individual or owner-employee to a retirement program pursuant to a plan adopted by such individual and approved by the Internal Revenue Service" and the semicolon (;) following said phrase, in line 8 of said subdivision, the following:

"reasonable amounts paid by or on behalf of an individual for his benefit to an individual retirement account described in Section 408(a) of the Internal Revenue Code of 1954 as amended, for an individual retirement annuity described in Section 408(b) of the Internal Revenue Code of 1954 as amended, or for a retirement bond described in Section 409 of the Internal Revenue Code of 1954 as amended (but only if the bond is not redeemed within 12 months of the date of its issuance);".

Sec. 2.  G.S. 105-161(f)(l) is hereby amended by renumbering paragraph(b) thereof as paragraph (c) and by adding after the current paragraph (a) a new paragraph (b) to read as follows:

"b.        Any individual retirement account which is exempt from taxation under Section 408(e) of the Internal Revenue Code of 1954 as amended."

Sec. 3.  G.S. 105-141(b)(19) is hereby amended by changing the period (.) at the end of current subsection (19) to a semicolon (;) and by adding after said semicolon (;) the following:

"and amounts earned during the income year by an individual retirement account described in Section 408(a) of the Internal Revenue Code of 1954 as amended, or an individual retirement annuity described in Section 408(b) of the Internal Revenue Code of 1954 as amended, provided that such individual retirement account or individual retirement annuity is exempt from federal income taxation under Section 408(e) of the Internal Revenue Code of 1954 as amended."

Sec. 4.  G.S. 105-141(a) is hereby amended by deleting the word "and" at the end of subsection (18), by changing the period (.) at the end of subsection (19) to a semicolon (;) and by adding after said semicolon (;) the word "and", and by adding after subsection (19), as amended, a new subsection (20) to read as follows:

"(20)    Subject to the provisions of G.S. 105-141(b)(4), amounts received or made available from:

(i)         individual retirement accounts described in Section 408(a) of the Internal Revenue Code of 1954 as amended;

(ii)        individual retirement annuities described in Section 408(b) of the Internal Revenue Code of 1954 as amended; and

(iii)       retirement bonds described in Section 409 of the Internal Revenue Code of 1954 as amended to the extent such amounts are includable in the recipient's gross income under the Internal Revenue Laws of the United States."

Sec. 5.  G.S. 105-142(d) is hereby amended by inserting immediately after the word "available" and immediately before the semicolon (;) in line 6 of the first unnumbered paragraph of said subsection the following:

"except to the extent such distribution is a rollover amount which is not includable in federal gross income under Section 402(a)(5) of the Internal Revenue Code of 1954 as amended, in the year in which distributed or made available", and by adding after the first unnumbered paragraph thereof and before the second unnumbered paragraph thereof two new paragraphs to read as follows:

"The amount paid or distributed out of an individual retirement account described in Section 408(a) of the Internal Revenue Code of 1954 as amended, or individual retirement annuity described in Section 408(b) of the Internal Revenue Code of 1954 as amended, shall be includable in the gross income of the payee or distributee to the extent such amounts are includable in the payee's or distributee's gross income for federal income tax purposes.

Subject to the provisions of G.S. 105-141(b)(4) the amount received or made available from a retirement bond described in Section 409 of the Internal Revenue Code of 1954 as amended, shall be included in the gross income of the payee or distributee to the extent such amounts are includable in the payee's or distributee's gross income for federal income tax purposes."

Sec. 6.  G.S. 105-141(b)(17)b. is hereby amended by deleting the last unnumbered paragraph thereof which reads as follows:

"The provisions of this subdivision shall not apply to any amounts contributed by an employer pursuant to an agreement to take a reduction in salary or to forego an increase in salary."

Sec. 7.  G.S. 105-212 is hereby amended by inserting after the phrase "nor to any funds, evidences of debt or securities held irrevocably in a pension, profit-sharing, stock bonus, or annuity plan established by an employer for the benefit of his employees or for himself and his employees if such plan qualifies for exemption from income tax under the provisions of G.S. 105-141(b)(19)" and the semicolon (;) following said phrase, in line 16 of the first unnumbered paragraph of said section, the following:

"nor to any funds, evidences of debt, or securities held in an individual retirement account described in Section 408(a) of the Internal Revenue Code of 1954 as amended, or an individual retirement annuity described in Section 408(b) of the Internal Revenue Code of 1954 as amended, if such individual retirement account or individual retirement annuity is exempt from income tax under the provisions of G.S. 105-161(f)(l)b. or G.S. 105-141(b)(19)."

Sec. 8.  G.S. 105-228.5, as it appears in the 1974 Cumulative Supplement to Volume 2D of the General Statutes of North Carolina, is hereby amended by rewriting the third paragraph thereof to read as follows:

"Every insurer, in computing the premium tax, shall exclude from the gross amount of premiums all premiums received on or after July 1, 1973, from policies or contracts, issued in connection with the funding of a pension, annuity or profit-sharing plan, qualified or exempt under Sections 401, 403, 404, 408 or 501 of the United States Internal Revenue Code as now or hereafter amended and the gross amount of all such premiums shall be exempt from the tax levied by this section."

Sec. 9.  Sections 1 through 7 of this act shall be effective for income years beginning on or after January 1, 1976, and Section 8 of this act shall be effective for income years beginning on or after January 1, 1975.

In the General Assembly read three times and ratified, this the 11th day of June, 1975.