The Massachusetts Department of Revenue (DOR) has clarified its position on the deductibility of 401(k) contributions. In Income Tax Directive 08-3, effective for 2008 and later years, the DOR denied deductions for 401(k) contributions for partners and self-employed individuals, whether the contributions are elective or matching. This is in direct conflict with and supersedes earlier DOR positions that explicitly allowed partners and self-employed individuals a deduction for elective contributions to 401(k) plans.
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