Updated October 16, 2026. Quick answer: Maryland names both plans: the booklet’s FAQ asks “Do 401 (k) and 403(b) plans qualify for the pension” exclusion and answers “Yes, but an IRA does not”, and the instructions count plans “qualified under Sections 401(a), 403 or 457(b) of the Internal Revenue Code”, up to $41,200 for people 65 or over or totally disabled.
State retirement-income forms, line by line: Maryland Form 502R.
Maryland at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | Yes, 403(b) and 457(b) plans are named as qualifying |
| Do the state’s documents name these plans? | The documents read name both 403(b) and 457 plans |
| Retirement exclusion or credit | Pension exclusion of up to $41,200 per person for age 65 or over or totally disabled, reduced by Social Security and railroad retirement benefits |
| Public-employee pension rule | No general public-employee exclusion; military and public-safety retirement income are separate subtractions |
| Rate in the documents read | Progressive, with a table in the booklet |
| Changed for 2026? | The documents read describe no 2026 change |
What the Maryland documents say
The Resident Booklet says “The maximum allowable exclusion is $41,200” and its FAQ asks whether “You were 65 or over or totally disabled”. The exclusion is reduced dollar for dollar by Social Security and railroad retirement benefits and covers taxable income from an employee retirement system, not an IRA.
The statute, Section 10-209 of the Tax-General Article, repeats the plan definition: “qualified under § 401(a), § 403, or § 457(b)”.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The exclusion is reduced by Social Security and railroad retirement benefits, so the amount a person can use depends on those benefits.
- Ineligible deferred compensation plans do not qualify under the instructions.
Common mistakes
- Assuming Maryland’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether Maryland taxes 401(k) and IRA withdrawals, Maryland retirement taxes, whether Maryland taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 Maryland Resident Income Tax Return Instructions (Resident Booklet, Form 502): https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/instructions/2025/resident-booklet.pdf
- Annotated Code of Maryland, Tax: General, Section 10-209: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtg§ion=10-209&enactments=false
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.