TAX CONSIDERATIONS - BENEFICIARIES
An allowance or death benefit can be either fully or partly taxable depending on whether your contributions were paid on a before-tax or after-tax basis. Additional factors affecting your tax liabilities may include your retirement plan, tax exclusions and lump-sum payments.
The Form 1099-R you receive in January will show the amount of the taxable income.
For questions regarding tax matters, consult with a professional advisor; LACERA does not offer legal or tax advice.
VENTURA RULING TAX EXCLUSION
The IRS Private Letter Ruling issued to Ventura County states that members who receive a service-connected disability allowance may reduce the tax liability of their gross retirement allowance by an amount equal to 50% of their final compensation. That portion of the allowance which is greater than 50% of final compensation is subject to income taxation. This exclusion would also apply to a surviving spouse of a retired member, or a surviving spouse of an active member, whose death was service-connected.
10/25/10