Image via WikipediaWhen I wrote my piece about taxing pensions as proposed by Michigan Governor Rick Snyder, I assumed that everyone knew what a pension was.
I explained that a pension is NOT your SOCIAL SECURITY payments that you receive as your retirement income. Those payments are NOT TAXED and will not be taxed.
Also your 401(k) is not a pension but a retirement savings plan. If you have an IRA; this is not a pension. If you have an annuity; this is not a pension.
A PENSION is a contract with your employer where your employer promises to pay you a PENSION on a monthly payment basis after you retire.
I guess since many people do not have pensions, they get confused when people say that the governor wants to tax their retirement income. Retirement income, to most people, means their Social Security monthly payments; pensions are payments “in addition” to Social Security payments and only those are being proposed for taxation.
Most states that have an income tax, tax pensions…Michigan
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