Sec. 1. 36 MRSA §5122, sub-§2, ¶M, as amended by PL 2001, c. 396, §34 and affected by §50, is further amended to read:

M. An amount, for each recipient of benefits under an employee retirement plan, that is the lesser of:

(1) Six thousand dollars reduced by the total amount of the primary recipient's social security benefits and railroad retirement benefits paid by the United States, but not less than $0. The reduction does not apply to benefits paid under a military retirement plan; or

(2) The aggregate of benefits received by the primary recipient under employee retirement plans and included in federal adjusted gross income.

For purposes of this paragraph, "employee retirement plan" means a state, or federal or military retirement plan or any other retirement benefit plan established and maintained by an employer for the benefit of its employees under Section 401(a), Section 403 or Section 457(b) of the Code. "Employee retirement plan" does not include an individual retirement account under Section 408 of the Code, a Roth IRA under Section 408A of the Code, a rollover individual retirement account, a simplified employee pension under Section 408(k) of the Code, a military retirement plan as defined in paragraph T or an ineligible deferred compensation plan under Section 457(f) of the Code. For purposes of this paragraph, "military retirement plan" means benefits received as a result of service in the active or reserve components of the Army, Navy, Air Force, Marines or Coast Guard;

Sec. 2. 36 MRSA §5122, sub-§2, ¶¶R and S, as enacted by PL 2001, c. 714, Pt. AA, §4, are amended to read:

R. For tax years beginning in 2005, 2006 or 2007, an amount equal to 1/3 of any amount added back to federal adjusted gross income by the taxpayer for the 2003 tax year pursuant to subsection 1, paragraph N, except with respect to 3-year property, in which case this paragraph does not apply to 2006 or 2007 tax years and the amount to be subtracted pursuant to this paragraph in the 2005 tax year is an amount equal to the amount added back pursuant to subsection 1, paragraph N for tax years beginning in 2003; and

S. For tax years beginning in 2006, 2007 or 2008, an amount equal to 1/3 of any amount added back to federal adjusted