I doubt that is what PA intended and thats not even what the basic literature says, it uses the word contribution. I don't have a copy of PA's actual tax code modification handy, I thinks its in PA SB 300 of 2006/7. Its possible that the bill was poorly written, but on the surface I suspect it does NOT mean one can get credit for a mere transfer of a prior contribution. Since I made some hefty contributions prior to PA's new tax credit, I would be delighted to learn I can recycle funds and recapture tax credits---but I just don't see it. (Now with a state that gives a credit for sums into just its own plans to move external funds into home state plan could be a different story, but thats not the PA example as we permit it for any plan)
Now if you make a transfer such that it appears as a new contribution it may not come up under PA's income tax tax reporting ---but I'd not want to give you odds of wining on audit.
PS if you seek to game the PA tax code you should consider that you can set up multiple plans with different beneficiaries, then change beneficairy designations.
But I think you are on wrong side of language to take a deduction for a transfer and the intent is for new contributions.
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Drew
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