Questions & Answers

Which distributions are partially eligible for the Hawaii Pension Exclusion?

Your distributions may be partially eligible for the Hawaii Pension Exclusion if they came from one of the following scenarios:
  1. A privately purchased annuity. The portion of your cost included in each distribution may be excluded.
  2. A profit-sharing plan to which employee contributions were made. Only the increase in the value of the plan attributable to your contributions is taxable.
  3. A death benefit as a beneficiary of a deceased employee.
  4. A pension plan to which employee contributions were made (i.e. both the employee and the employer contributed towards the cost of the pension). Only the increase in the value of the plan attributable to your contributions is taxable.
  5. A hybrid plan which is partly pension and partly deferred compensation, such as a 401(k) plan with a profit-sharing component or employer matching program, an SEP plan with employer contributions as well as a salary reduction option, or any similar hybrid plan.
If you claim the Hawaii Pension Exclusion for one of the above scenarios, you must complete Schedule J  and enter the amount from line 24 as your nontaxable pension income (regardless of your residency status). Choose to print and mail your return to Hawaii and attach the completed Schedule J to your return. If you don't want to complete Schedule J, don't claim an exclusion for these distributions.

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