Expert: Allen - 11/23/2007

Question
Hi,
I cashed out a of pension in 1999. I rolled a 401k balance and the pension cash out in to an IRA. I currently reside and work in a state that does not tax pension retirement income(Hawaii). Since part of my IRA balance was from a pension, can I consider part of my future IRA distributions as pension income?
Where can I find additional reading material on this issue?

Answer
I don't know the answer to your question. The only place I can think of to get more information is to check the instructions for the Hawaii tax return.

One other thought. Can you set up a small consulting business. The business can then set up a profit sharing plan and you can roll the assets from the IRA to your profit sharing plan. It should then be considered as pension income for Hawaii tax purposes. One downside to this approach is you will have to file a 1099R each January to report the distributions and you will have to file Form 5500EZ each year for the profit sharing plan. If you use an accountant, he/she can help you with these forms.