A non-qualified deferred compensation plan is a retirement plan in which an employer withholds a portion of an employees pay, invests it, and then turns it back over to the employee upon an agreed date, such as their retirement. Currently, workers who invest in such plans pay state income tax when the funds are withdrawn from the plan. However, due to the current language of the Tax Reform Code, employees must pay the state income tax on withdrawals from these plans, as well as a local tax at both the time of deferral and at the time of withdrawal. This current policy unfairly affects those who are responsibly saving for their retirement.   

 

My legislation amends the Tax Reform Code to exempt distributions from these plans from being considered taxable income. By exempting distributions from taxable income, we will end double taxation at the local level and help Pennsylvanians retain more of their hard-earned wages for years of retirement that await them. This will provide our workers with a higher level of retirement security and support a fairer tax system.  

 

Please consider co-sponsoring this legislation that will help our residents save more money for retirement and restrict unfair double-taxation.