The Internal Revenue Service Jan. 11 posted to its Web site a notice highlighting two changes for certain government employee retirement plans made by the Pension Protection Act of 2006 (Pub. L. No. 109-280).

The first lowered the age from 55 to 50 for the exception to the 10 percent early distribution penalty for qualified public safety employees separated from service. The second provided an exclusion from gross income of up to $3,000 for qualified health insurance premiums deducted from distributions from the plan.

IRS Jan. 10 issued Notice 2007-7 providing guidance in question-and-answer format on new distribution provisions in the law (7 PBD, 1/10/07).

Georgia Governor Proposes Pension Tax Elimination

In his annual state of the state address to a joint session of the General Assembly, Georgia Gov. Sonny Perdue (R) said Jan. 10 his proposal to eliminate the state’s 6 percent income tax on the retirement income of seniors would help create economic growth by attracting retirees to the state.

“With the money they save off state income taxes, retirees can better cover the costs of prescription drugs and healthcare, or spend more time with their grandchildren,” he said.

The tax cut would eliminate state income tax on retirement income such as pensions or certain interest income for Georgians 65 and older, according to Perdue. It would cost the state about $142 million per year.

Text of Perdue's remarks is available at http://www.gov.state.ga.us/press/2007/press1326.shtml.