Reporting Vs Deferred: We saw this for the SE Tax, where the Tax was deferred, but the Income was all reported. It wasn't really a confusion, but to some preparers, they though they had to include the income somewhere, again.

I found this one reference for MD: "Reported as taxable the year of distribution, but, unless the participant elects immediate taxation, taxed ratably to the participant as ordinary income over three years"

From "MARYLAND STATE RETIREMENT AND PENSION SYSTEM
IMPORTANT NOTICE
OPTIONAL RETIREMENT PROGRAM"

And it's a pdf; now I lost the link. Sorry.