Molter v. Department of Treasury

We must decide whether distributions from a deferred compensation plan, paid to a nonresident, are subject to the state’s income tax if the original contributions to the plan represented earnings from employment in Michigan. Affirming a decision of the Court of Claims, the Court of Appeals ruled that distributions from such a plan are taxable. We affirm in part and reverse in part.

I

Plaintiff Molter, while a State of Michigan employee, participated in a deferred compensation plan qualified under § 457 of the Internal Revenue Code (irc).1 He began receiving distributions from his plan account…