Agree, generally speaking distributions from IRAs are not eligible for Maryland pension exclusion. This should serve as a reminder for Marylanders to be very careful as they approach age 65 and decide to roll a 401(k) plan into a rollover IRA. The 401(k) plan is considered an employer-based plan (similar to a pension plan) and eligible for pension exclusion. Your IRA is not. Once you roll 401(k) money out of such employer-based plan into a rollover IRA the money loses its pension exclusion eligibility. (The money could regain its pension exclusion eligibility should the individual roll the money back into another employer's qualified 401(k) plan.) If you don't draw your social security until age 66 or choose to put off taking it until up to age 70 and you don't have an employer provided pension plan (many of us don't), you might regret rolling any 401(k) money into an IRA as you won't have any retirement assets from which to draw in the year you turn 65 that will qualify for Maryland's pension exclusion.
