Notice

Notice Number:05-04
Tax Type:Individual Income Tax
Brief Description:Kansas Income Tax Treatment of Certain Payments from the Kansas Public Employees Retirement System (KPERS)
Keywords:
Approval Date:05/20/2005


Body:
KANSAS DEPARTMENT OF REVENUE
OFFICE OF POLICY AND RESEARCH


REVISED NOTICE 05-04


Kansas Income Tax Treatment of
Certain Payments From The
Kansas Public Employees Retirement System (KPERS)


This Revised Notice 05-04 replaces Notice 05-04 issued May 20, 2005. Revisions were made to recognize changes made during the 2007 Legislative Session. The revisions affect only the section captioned “Roll-over Payments”.


Advice has been requested concerning the income tax treatment of certain payments received from the Kansas Public Employees Retirement Systems (KPERS).

Introduction

During the period of their employment, KPERS members are required to contribute a percentage of their gross income to their own membership account. These contributions are credited with interest, based on the member’s date of employment, throughout the KPERS membership period under K.A. A. 74-4919(1). Contributions plus accrued interest are defined as “accumulated contributions” by K.S.A. 74-4902.

Upon termination of employment or upon retirement KPERS members are entitled to receive certain payments from their KPERS membership account. As a rule these payments are taxable for federal income tax purposes. Therefore, these payments are generally included in federal adjusted gross income.

Kansas law requires the use of federal adjusted gross income as the starting point for computing the Kansas income tax. Certain addition or subtraction “modifications” are then made in accordance with K.S.A. 79-32,117. Subsection (c)(ii) of K.S.A. 79-32,117 provides that “Any amounts received which are included in federal adjusted gross income but which are specifically exempt from Kansas income taxation under the laws of the state of Kansas” are to be subtracted from federal adjusted gross income prior to computing the Kansas income tax.

All KPERS benefits are specifically exempt from Kansas income tax. The exemption is found in K.S.A. 74-4923(b), which states, in pertinent part:




Date Composed: 05/20/2005 Date Modified: 04/07/2006