No. 276 March Term, 1977, Appeal from the Decree of the Court of Common Pleas of Allegheny County, Orphans' Court Division No. 4893 of 1975.
J. Craig Kuhn, Kuhn, Engle & Stein, Pittsburgh, for appellant.
John M. Duff, Deputy Atty. Gen., Pittsburgh, for appellee.
Eagen, C. J., and O'Brien, Roberts, Nix, Manderino, Larsen and Flaherty, JJ. Manderino, J., did not participate in the consideration or decision of this case. Eagen, C. J., filed a dissenting opinion.
The Legislature specifically exempts from estate taxation payments made under various insurance and retirement plans. Section 316 of the Inheritance and Estate Tax Act,*fn1 like the § 303 exemption for insurance proceeds,*fn2 exempts from estate tax virtually all retirement plan benefits that are payable "to distributees designated by decedent or designated
in accordance with the terms of the plan." The § 316 exemption is unavailable, however, when, prior to death, a decedent had the "right to possess (including proprietary rights at termination of employment), enjoy, assign or anticipate the payments" made under the plan. At issue here is whether decedent, Wayne E. Rankin, had a "right to possess, enjoy, assign or anticipate" the benefits of his retirement plan when such benefits were available only on termination of employment or retirement. We hold that the proceeds of decedent's retirement plan fall within § 316 and are not subject to inclusion in decedent's taxable estate. Accordingly, we vacate the decree of the orphans' court and remand with directions to exclude from the decedent's taxable estate the amount of his accumulated contributions paid to beneficiaries designated in accordance with the plan.
Decedent died on October 10, 1975, at age 59. For approximately 34 years before his death, he was employed by TWA, most recently as a vice-president. Six months prior to his death, decedent, due to illness, ceased active service. During those six months decedent received disability benefits under a separate TWA disability plan.
Decedent had contributed to the TWA Retirement Plan, but received no benefits before his death. Benefits under the Retirement Plan could be obtained only after retirement or termination of employment. Decedent neither retired nor terminated his employment before his death. Following his death the benefits under the plan were paid to his wife, the designated beneficiary.
By way of a supplemental appraisement the Commonwealth included in the decedent's estate the amount of his accumulated contributions paid into the plan. On appeal, the orphans' court, at audit, agreed with the Commonwealth and dismissed the appeal. An ...