Can I subtract a rollover from a regular IRA to a Roth IRA?

If you are 59 ½ in the year the rollover occurs, you may deduct the rollover as a pension deduction within the limits for deducting pension income.

Can I subtract a distribution from a Roth IRA?

No. Distributions from a Roth IRA are already excluded from income on your federal return and therefore may not be subtracted on the Michigan return.

Can I subtract a distribution from deferred compensation?

• A 457 plan does not meet the qualifications for subtraction. You cannot subtract distributions from a 457 plan.
• Distributions from a 401(k) or 403(b) plan are deductible if they are the result of the employer's contributions or employee contributions required by the plan. Employee's contributions required by the plan to obtain an employer match are considered mandated. Amounts distributed from a 401(k) or 403(b) plan that allows the employee to set the amount of compensation to be deferred and does not prescribe retirement age or years of service do not qualify as retirement and pension benefits.
• You may not subtract any distributions that are reported by the payer on a W-2 Form.

May senior citizens take a subtraction for interest/dividends and capital gains?

Yes. Senior Citizens (aged 65 or older, or the surviving un-remarried spouse of a senior) may subtract interest, dividends and capital gains. The subtraction is limited to $9,690 for single filers and to $19,380 for joint filers for 2008. These limits must be reduced by any pension subtraction taken.

Example:
Senior Citizen filing a single return with $5,000 pension subtraction is only allowed an interest subtraction of $4,690 ($9,690 - 5,000 = $4,690).

Mary is 65 years old and has pension of $5,000 and interest income of $4,000.

Maximum interest subtraction $9,690
Less pension subtraction        - 5,000

Allowable interest subtraction $4,690

> Information for Senior Citizens and Retirees