2010 Pennsylvania Code
Title 20 - DECEDENTS, ESTATES AND FIDUCIARIES
Chapter 81 - Principal and Income
8149 - Retirement benefits, individual retirement accounts, deferred compensation, annuities and similar payments.

     § 8149.  Retirement benefits, individual retirement accounts,
                deferred compensation, annuities and similar
                payments.
        (a)  General rule.--
            (1)  The trustee shall allocate to income the greater of:
                (i)  the portion of a payment characterized by the
            payor as interest or a dividend or a remittance in lieu
            of interest or a dividend; or
                (ii)  the portion of the payment characterized as
            imputed interest for Federal income tax purposes.
            (2)  The balance of any such payment shall be allocated
        to principal.
        (b)  Allocation under contract calling for equal
     installments.--
            (1)  If no part of a payment under a contract calling for
        equal installments over a fixed period of time is allocable
        to income under the provisions of subsection (a), the
        difference between the trust's acquisition value of the
        contract and the total expected return shall be deemed to be
        interest.
            (2)  The trustee shall allocate to income the portion of
        each payment equivalent to interest on the then unpaid
        principal balance at the rate specified in the contract or a
        rate necessary to thus amortize the difference between the
        expected return and the acquisition value, where that rate is
        readily ascertainable by the trustee.
        (c)  Allocation when internal net income of fund is readily
     ascertained.--
            (1)  If no portion of a payment from a separate fund held
        exclusively for the benefit of the trust is allocable to
        income under subsections (a) and (b) but the internal net
        income of the fund determined as if the fund were a separate
        trust subject to Subchapters B (relating to decedent's estate
        or terminating income interest) through E (relating to
        allocation of disbursements during administration of trust)
        is readily ascertainable by the trustee, the portion of the
        payment equal to the then undistributed net income of the
        fund realized since the trust acquired its interest in the
        fund shall be deemed to be a distribution of such income and
        shall be allocated to the trust income account.
            (2)  The balance of any such payment shall be allocated
        to principal.
        (d)  When not otherwise allocable to income.--
            (1)  The trustee shall allocate to income 10% of the part
        of the payment which is required to be made during the
        accounting period and the balance to principal if:
                (i)  no part of the payment is allocable to income
            under subsection (a), (b) or (c); and
                (ii)  all or part of the payment is required to be
            made.
            (2)  The trustee shall allocate the entire payment to
        principal if:
                (i)  no part of a payment is required to be made; or
                (ii)  the payment received is the entire amount to
            which the trustee is entitled.
            (3)  For purposes of this subsection, a payment is not
        required to be made to the extent that it is made because the
        trustee exercises a right of withdrawal.
        (e)  Allocation to obtain marital deduction.--If, to obtain a
     Federal estate or gift tax marital deduction for a trust, the
     trustee must allocate more of a payment to income than provided
     for by this section, the trustee shall allocate to income the
     additional amount necessary to obtain the marital deduction.
        (f)  Application.--This section does not apply to payments to
     which section 8150 (relating to liquidating asset) applies.
        (g)  Definition.--As used in this section, the term "payment"
     means a payment that a trustee may receive over a fixed period
     of time or during the life of one or more individuals because of
     services rendered or property transferred to the payor in
     exchange for future payments. The term includes all of the
     following:
            (1)  A payment made in money or property from:
                (i)  the payor's general assets; or
                (ii)  a separate fund created by the payor or
            another.
            (2)  A payment on or from:
                (i)  an installment contract or note;
                (ii)  a private or commercial annuity;
                (iii)  a deferred compensation agreement;
                (iv)  an employee death benefit;
                (v)  an individual retirement account; or
                (vi)  a pension, profit-sharing, stock or other
            bonus, or stock-ownership plan.

        Cross References.  Section 8149 is referred to in sections
     8141, 8144, 8146, 8147, 8148, 8150, 8155 of this title.