Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
THE LIMITATION ON STATE TAXATION OF RETIREMENT INCOME.
(a) In General.--Section 114(b)(1)(I) of title 4, United States Code, is amended-- (1) by inserting ``(or any plan, program, or arrangement that is in writing, that provides for retirement payments in recognition of prior service to be made to a retired partner, and that is in effect immediately before retirement begins)'' after ``section 3121(v)(2)(C) of such Code'', (2) by inserting ``which may include income described in subparagraphs (A) through (H)'' after ``(not less frequently than annually'', (3) by adding at the end the following: ``The fact that payments may be adjusted from time to time pursuant to such plan, program, or arrangement to limit total disbursements under a predetermined formula, or to provide cost of living or similar adjustments, will not cause the periodic payments provided under such plan, program, or arrangement to fail the `substantially equal periodic payments' test.'', and (4) by adding at the end the following: ``(4) For purposes of this section, the term `retired partner' is an individual who is described as a partner in section 7701(a)(2) of the Internal Revenue Code of 1986 and who is retired under such individual's partnership agreement.''.
(b) Application.--The amendments made by this section apply to amounts received after December 31, 1995.
Approved August 3, 2006.
LEGISLATIVE HISTORY--H.R. 4019: ---------------------------------------------------------------------------
CONGRESSIONAL RECORD, Vol. 152 (2006): HOUSE REPORTS: No. 109-542 (Comm. on the Judiciary). July 17, considered and passed House. July 24, considered and passed Senate.
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