Beneficiaries
If you received a decedent’s pension and annuity income, you may make this subtraction if the decedent would have been entitled to it, had the decedent continued to live, regardless of your age. If the decedent would have become 59½ during 2023, enter only the amount received after the decedent would have become 59½, but not more than $20,000.
If any portion of this exclusion was subtracted on the decedent’s personal income tax return, you must first reduce the amount you are eligible to claim by the same amount subtracted on the decedent’s return. The total pension and annuity income exclusion claimed by the decedent and the decedent’s beneficiaries cannot exceed $20,000.
If the decedent has more than one beneficiary, the decedent’s $20,000 pension and annuity income exclusion must be allocated among the beneficiaries. Each beneficiary’s share of the $20,000 exclusion is determined by multiplying $20,000 by a fraction whose numerator is the value of the pensions and annuities inherited by the beneficiary, and whose denominator is the total value inherited by all beneficiaries of the decedent’s pensions and annuities.
Example: A taxpayer received pension and annuity income totaling $6,000 as a beneficiary of a decedent who was 59½ before January 1, 2023. The decedent’s total pension and annuity income was $24,000, shared equally among four beneficiaries. Each beneficiary is entitled to one-quarter of the decedent’s pension exclusion, or $5,000 ($20,000 multiplied by 1/4). The taxpayer also received a qualifying pension and annuity payment of $14,000 in 2023. The taxpayer is entitled to claim a pension and annuity income exclusion of $19,000 ($14,000 attributable to the taxpayer’s own pension and annuity payment, plus $5,000 received as a beneficiary*).
*The total amount of the taxpayer’s pension and annuity income exclusion that can be applied against the taxpayer’s pension and annuity income received as a beneficiary is limited to the taxpayer’s share of the decedent’s pension and annuity income exclusion.