(a) For purposes of computing “taxable income of a nonresident or part-year resident” under paragraph (1) of subdivision (i) of Section 17041, gross income of a nonresident, as defined in Section 17015, from sources within this state shall not include “qualified retirement income” received on or after January 1, 1996, for any part of the taxable year during which the taxpayer was not a resident of this state.

(b) For purposes of this section, “qualified retirement income” means income from any of the following:

(1) A qualified trust under Section 401(a) of the Internal Revenue Code that is exempt under Section 501(a) of the Internal Revenue Code from taxation.

(2) A simplified employee pension as defined in Section 408(k) of the Internal Revenue Code.

(3) An annuity plan described in Section 403(a) of the Internal Revenue Code.

(4) An annuity contract described in Section 403(b) of the Internal Revenue Code.

(5) An individual retirement plan described in Section 7701(a)(37) of the Internal Revenue Code.

(6) An eligible deferred compensation plan as defined in Section 457 of the Internal Revenue Code.

(7) A governmental plan as defined in Section 414(d) of the Internal Revenue Code.

(8) A trust described in Section 501(c)(18) of the Internal Revenue Code.

(9) Any plan, program, or arrangement described in Section 3121(v)(2)(C) of the Internal Revenue Code, or any plan, program, or arrangement that is in writing, that provides for retirement payments in recognition of prior service to be made to a retired partner, and that is in effect immediately before retirement begins, if that income is either of the following:

(A) Part of a series of substantially equal periodic payments (not less frequently than annually), which may include income described in paragraphs (1) to (8), inclusive, made for either of the following:

(i) The life or the life expectancy of the recipient (or the joint lives or joint life expectancies of the recipient and the designated beneficiary of the recipient).

(ii) A period of not less than 10 years.

(B) A payment received after termination of employment, under a plan, program, or arrangement to which that employment relates, maintained solely for the purpose of providing retirement benefits for employees in excess of the limitation imposed by Section 401(a)(17), 401(k), 401(m), 402(g), 403(b), 408(k), or 415 of the Internal Revenue Code, or any combination of those sections, or any other limitation on contributions or benefits in the Internal Revenue Code on plans to which any of those sections apply.

(C) The fact that payments may be adjusted, from time to time, pursuant to this plan, program, or arrangement to limit total disbursements under a predetermined formula, or to provide cost-of-living or similar adjustments, will not cause the periodic payments provided under that plan, program, or arrangement to fail the “substantially-equal-periodic-payments” test.

(10) Any retired or retainer pay of a member or former member of a uniform service computed under Section 1401 and following of Title 10 of the United States Code.

(c) For purposes of this section, the term “retired partner” is an individual who is described as a partner in Section 7701(a)(2) of the Internal Revenue Code and who is retired under that individual’s partnership agreement.

(d) This section shall apply only to any taxable year, or portion thereof, that the provisions of Section 114 of Title 4 of the United States Code, relating to limitation on state income taxation of certain pension income, are effective.

(e) Except as otherwise provided, references to the Internal Revenue Code are subject to paragraph (1) of subdivision (a) of Section 17024.5.

(Amended by Stats. 2010, Ch. 14, Sec. 35. (SB 401) Effective January 1, 2011.)