Formerly, employees who contributed to the systems paid taxes on their compensation, including those amounts contributed to the Retirement System or Pension System.
Under the pickup program, the employer is considered to have “picked up” the employee’s contributions, i.e., the contributions are treated as if the employer made them for federal tax purposes.
The employee’s compensation is reduced, pre-tax, by the amount of the contribution picked up by the employer.
The pickup contributions are not taxable for federal purposes until they are distributed or made available to the employee.
For state income tax purposes, however, the pickup contributions are added to federal adjusted gross income in computing Maryland adjusted gross income pursuant to
Tax-General § 10-204(f).
The reason for the addition modification is that the amounts reported in Box 1 of the federal Form W-2 do not include, in salaries and wages, the contributions picked up
by the state.
In order for the state to tax the pickup amount as required under law, an addition modification is provided.
Is the retirement system by whom you are paid a 'participating governmental unit'? A list of approved units are included in the Administrative Release above.
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I have the same issue. I do not see the question "Where is your distribution from?" when I enter the Pick-Up contribution in Box 19. I enter the anount and it does not appear to save. When I go back, the box is blank.
Edit: I may have found an answer. Seems this question has been asked for several years and the issue has not been cleared up in TurboTax. I guess Maryland Form 502SU has to used for the amount to be saved but the instructions are very vague.
"when I enter the Pick-Up contribution in Box 19" - do you mean that you are in Forms mode and entered the contribution on a form? On what form is box 19?