STAND. COM. REP. NO. 1198

 

Honolulu, Hawaii

                  

 

RE:    H.B. No. 1550

       H.D. 2

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

 

Madam:

 

     Your Committee on Ways and Means, to which was referred H.B. No. 1550, H.D. 2, entitled:

 

"A BILL FOR AN ACT RELATING TO TAXATION,"

 

begs leave to report as follows:

 

     The purpose of this measure is to impose the state income tax on rollovers made by employees of state and county agencies and tax-exempt organizations from qualifying annuity plans and qualifying deferred compensation plans, to eligible retirement plans or individual retirement accounts.

 

     Comments on this measure were submitted by one private organization.  The written comments may be reviewed on the Legislature's website.

 

     Your Committee finds that employees who roll over or transfer contributions from their deferred-compensation plans to purchase Employees' Retirement System membership service credits or to upgrade their noncontributory plan service to hybrid plan service in the future are not assessed an income tax on these funds.  Since, under current law, pension distributions from the hybrid plan are not subject to income tax, these rollover or transferred funds completely escape Hawaii income tax.  Your Committee further finds that, since deferred compensation plans would normally be taxed when an employee withdraws these funds at a later date, taxing the rolled over or transferred funds at the time they are rolled over or transferred would appear to be equitable and fair.

 

     Your Committee has amended this measure by changing the effective date to July 1, 2090, to facilitate further discussion on the measure.

 

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1550, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1550, H.D. 2, S.D. 1, and be placed on the calendar for Third Reading.

 

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

 

 

 

____________________________

DONNA MERCADO KIM, Chair