Benefits Plans - Retirement Savings Plans: Michigan Income Tax

Michigan tax law permits you to subtract qualifying pension benefits included in your adjusted gross income from Schedule I of the Michigan MI-1040 tax form. This reduces your income that is subject to Michigan income tax. The amount you may subtract depends on the source of the benefit (public versus private retirement plans).

Pension benefits from a public retirement plan, such as the University of Michigan Basic Retirement Plan, are generally an allowed subtraction. This allows you to subtract TIAA-CREF and Fidelity distributions from the Basic Plan (your 5% and the 10% University contributions and earnings) on Line 12 of Schedule I of the Michigan MI-1040 tax form.

However, you cannot subtract distributions attributable to:

  • Additional or supplemental contributions and earnings you made to the Basic Retirement Plan (those made in addition to your 5% contribution necessary to receive the U-M 10% matching contribution).
  • Contributions and earnings you made to the Supplemental Retirement Account or SRA.
  • Contributions and earnings you made to the U-M 457(b) Deferred Compensation Plan.

In addition, your ability to take a subtraction may be limited if you also receive benefits from a private pension. The booklet for the Michigan MI-1040 provides instructions for Line 12 to determine to what extent the subtraction may be taken for both public and private retirement plan benefits.

As always, you should seek expert tax advice for your own tax situation.

For more information, contact:

Michigan Department of Treasury
Lansing , MI 48922

Income Tax Information

Reference: Michigan Income Tax Act of 1967, Michigan Income Tax Section 206.30(1)(f)(i) of the Act.

Next: IRS 10% Penalty

The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend or terminate them.