• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Taxability of defined benefit pension, when deceased

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

Kiawah

Senior Member
What is the name of your state (only U.S. law)? NC

My wife is going to retire, and as part of her retirement she will receive a defined benefit pension. She also gets to elect a percentage of survivor benefit, should she decease. Normally the spouse would be named as the beneficiary of this monthly survivor benefit.

We're exploring the possibility of naming our kids as the beneficiaries instead of me, with a goal of attempting to reduce the size of our estate that would ultimately be taxed. The pension plan administrator has indicated we can choose to have the kids as the beneficiaries.

If she passes, and the kids begin receiving that survivor pension income, is that pension annuity considered part of her estate value (and taxed if over the threshold)? Or, is it just taxable to them every year as normal income?

If it isn't part of the estate, wouldn't this be a good way to pass more money down to the kids and keep it out of my estate, assuming I don't need the money?
 
Last edited:



Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top