Mr. Jack E. Kennedy Executive Secretary Public Employees' Retirement Association of Colorado 1390 Logan, 4th Floor Denver, Colorado 80203
Dear Mr. Kennedy:
By letter of October 26, 1976, you have requested my opinion as to whether or not survivor benefits payable under PERA are subject to inheritance tax.
QUESTION PRESENTED AND CONCLUSION
Does an active member of PERA, under the terms of C.R.S. 1973,24-51-801, et seq., have a "right to designate a beneficiary" of the Survivor Benefit Plan, which right would make the benefit subject to inheritance tax under C.R.S. 1973, 39-23-107(1), as amended 1975?
My conclusion is no.
ANALYSIS
C.R.S. 1973, 39-23-107, as amended 1975, provides as follows:
39-23-107. Proceeds of insurance policies, annuities, pension and profit-sharing plans. (1) Proceeds of life insurance policies on the life of a decedent, in which he had any of the incidents of ownership, annuity contracts issued by life insurance companies which are owned by the decedent, and payments by reason of pension or profit-sharing plans in which the decedent had a right to designate beneficiaries whether or not the decedent contributed to the plan shall be taxable. (Emphasis supplied.)
Such right, if extant, must be found within the statutory plan, C.R.S. 1973, 24-51-801, et seq. . It is my understanding that upon the death of an active member of PERA, a statutorily limited class of beneficiaries may receive survivor benefits. These beneficiaries consist of: (1) a widow at varying ages dependent upon length of service of member (24-51-804); (2) widow and children under age 18 or 23 if in school (24-51-805); (3) children under age 18 or 23 if in school (24-51-806); (4) dependent parent receiving 25% of support from member (24-51-806). This opinion is restricted solely to benefits passing under the statutory provisions above noted. It does not cover other benefits receivable by survivors under any other part of Article 51, Title 24.
A close examination of the "survivor benefits" available under the Public Employees' Retirement Systems, Article 51, Chapter 24, indicates that they were created to provide for the security and welfare of certain statutorily denominated members of a family group upon the death of an active member of PERA prior to retirement. Such member has no right or power to modify or change the beneficiaries, and has no vested economic interest in such benefits. Compared to the rights granted a member upon retirement to choose among various options (C.R.S. 1973, 24-51-112(1)), the survivor benefit plan bestows no interest or rights upon the deceased member.
SUMMARY
An active member of PERA does not have a right to designate a beneficiary under the Survivors' Benefits Plan (C.R.S. 1973,24-51-801, et seq.) and therefore, such benefit is not subject to inheritance tax under C.R.S. 1973, 39-23-107(1), as amended.
Very truly yours,
J.D. MacFARLANE Attorney General
TAXATION AND REVENUE RETIREMENT SYSTEMS INHERITANCE
C.R.S. 1973, 39-23-107(1)
PERA PENSION PLANS Pera Pension Plans REVENUE, DEPT. OF Inheritance Tax
Active member of PERA cannot designate a beneficiary, therefore survivor benefit is not subject to state inheritance tax.