Kentucky Statutes 61.640 – Death before retirement — Beneficiary’s options — Taxable distributions
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(1) If a member dies prior to the first day of the month in which the member would have received his or her first retirement allowance, the member’s beneficiary shall be eligible for the benefits provided by this section if the member had on file a written designation of a beneficiary with the retirement office as provided by KRS
61.542 and the member met the following conditions at the date of his or her death: (a) The member was eligible to retire under KRS § 61.559(2) or (3), 61.5956(5)(a)
or (b), or 61.597(6)(a) or (b);
(b) The member was in active employment or on authorized leave of absence with five (5) or more years of service credit and died prior to his or her normal retirement date or was normal retirement age or older and had at least four (4) years of service credit; or
(c) The member was not in active employment or on authorized leave of absence with twelve (12) or more years of service credit and died prior to his or her normal retirement date.
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is a single person, then the beneficiary may elect to receive:
(a) A monthly benefit payable for the life of the beneficiary that is equal to the benefit that would have been paid had the member retired immediately prior to his or her date of death and elected to receive benefits payable under the survivorship one hundred percent (100%) option as provided in KRS
61.635(2);
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary Social Security adjustment option as provided in KRS § 61.635(9) that is the actuarial equivalent to the amount computed under paragraph (a) of this subsection;
(c) A monthly benefit payable for a period of sixty (60) months that is the actuarial equivalent to the amount computed under paragraph (a) of this subsection;
(d) A monthly benefit payable for a period of one hundred twenty (120) months that is the actuarial equivalent to the amount computed under paragraph (a) of this subsection;
(e) If the member began participating in the system prior to January 1, 2014, a monthly benefit payable for:
1. Sixty (60) months certain;
2. One hundred twenty (120) months certain;
3. The actuarial equivalent refund; or
4. The Social Security adjustment option;
that is equivalent to the benefit the member would have been entitled to receive based on his or her years of service and final compensation at the date of his or her death reduced by the survivorship fifty percent (50%) factor as provided for in KRS § 61.635(4), then reduced by fifty percent (50%), and that
is the actuarial equivalent to the amount computed under paragraph (a) of this subsection; or
(f) The higher of a refund of the member’s accumulated account balance as described in KRS § 61.625(1) or one (1) time lump-sum payment which shall be the actuarial equivalent of the amount payable under paragraph (a) of this subsection for a period of sixty (60) months.
(3) If the beneficiary eligible for benefits as provided by subsection (1) of this section are multiple beneficiaries or a trust, then the multiple beneficiaries by consensus or the trustee may elect to receive the actuarial equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section using the assumption that the beneficiary’s age is the same as the member’s age.
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is the member’s estate, then the beneficiary shall receive the higher of a refund of the member’s accumulated account balance as described in KRS § 61.625(1) or the one (1) time lump-sum payment payable under subsection (2)(f) of this section, using the assumption that the beneficiary’s age is the same as the member’s age.
(5) Payments of taxable distributions made pursuant to this section shall be subject to state and federal income tax as appropriate.
Effective: June 29, 2021
History: Amended 2021 Ky. Acts ch. 96, sec. 9, effective June 29, 2021. — Amended
2018 Ky. Acts ch. 107, sec. 36, effective July 14, 2018. — Amended 2013 Ky. Acts ch. 120, sec. 64, effective July 1, 2013. — Amended 2010 Ky. Acts ch. 173, sec. 6, effective July 15, 2010. — Amended 2009 Ky. Acts ch. 77, sec. 18, effective June 25,
2009. — Amended 2004 Ky. Acts ch. 36, sec. 22, effective July 13, 2004. — Amended
1998 Ky. Acts ch. 154, sec. 68, effective July 15, 1998. — Amended 1996 Ky. Acts ch. 167, sec. 16, effective July 15, 1996. — Amended 1994 Ky. Acts ch. 485, sec. 20, effective July 15, 1994. – Amended 1992 Ky. Acts ch. 240, sec. 39, effective July 14,
1992. — Amended 1986 Ky. Acts ch. 90, sec. 19, effective July 15, 1986. — Amended
1982 Ky. Acts ch. 423, sec. 10, effective July 15, 1982. — Amended 1976 Ky. Acts ch. 321, sec. 28. — Amended 1974 Ky. Acts ch. 128, sec. 25. — Amended 1972 Ky. Acts ch. 116, sec. 47. — Amended 1966 Ky. Acts ch. 35, sec. 12. — Amended 1964
Ky. Acts ch. 86, sec. 6. — Amended 1962 Ky. Acts ch. 58, sec. 18. — Amended 1960
Ky. Acts ch. 165, Part II, sec. 13. — Created 1956 Ky. Acts ch. 110, sec. 27.
Legislative Research Commission Note (6/29/2021). 2021 Ky. Acts ch. 96, sec. 12 provides that the amendments to KRS § 61.640 in 2021 Ky. Acts ch. 96, sec. 9 are retroactive to June 25, 2009.
Legislative Research Commission Note (12/13/2018). On December 13, 2018, the
Kentucky Supreme Court ruled that the passage of 2018 SB 151 (2018 Ky. Acts ch.
107), did not comply with the three-readings rule of Kentucky Constitution Section
46 and that the legislation is, therefore, constitutionally invalid and declared void. That ruling applies to changes made to this statute in that Act.
61.542 and the member met the following conditions at the date of his or her death: (a) The member was eligible to retire under KRS § 61.559(2) or (3), 61.5956(5)(a)
Terms Used In Kentucky Statutes 61.640
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Federal: refers to the United States. See Kentucky Statutes 446.010
- Month: means calendar month. See Kentucky Statutes 446.010
- State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
- Statute: A law passed by a legislature.
- Trustee: A person or institution holding and administering property in trust.
or (b), or 61.597(6)(a) or (b);
(b) The member was in active employment or on authorized leave of absence with five (5) or more years of service credit and died prior to his or her normal retirement date or was normal retirement age or older and had at least four (4) years of service credit; or
(c) The member was not in active employment or on authorized leave of absence with twelve (12) or more years of service credit and died prior to his or her normal retirement date.
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is a single person, then the beneficiary may elect to receive:
(a) A monthly benefit payable for the life of the beneficiary that is equal to the benefit that would have been paid had the member retired immediately prior to his or her date of death and elected to receive benefits payable under the survivorship one hundred percent (100%) option as provided in KRS
61.635(2);
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary Social Security adjustment option as provided in KRS § 61.635(9) that is the actuarial equivalent to the amount computed under paragraph (a) of this subsection;
(c) A monthly benefit payable for a period of sixty (60) months that is the actuarial equivalent to the amount computed under paragraph (a) of this subsection;
(d) A monthly benefit payable for a period of one hundred twenty (120) months that is the actuarial equivalent to the amount computed under paragraph (a) of this subsection;
(e) If the member began participating in the system prior to January 1, 2014, a monthly benefit payable for:
1. Sixty (60) months certain;
2. One hundred twenty (120) months certain;
3. The actuarial equivalent refund; or
4. The Social Security adjustment option;
that is equivalent to the benefit the member would have been entitled to receive based on his or her years of service and final compensation at the date of his or her death reduced by the survivorship fifty percent (50%) factor as provided for in KRS § 61.635(4), then reduced by fifty percent (50%), and that
is the actuarial equivalent to the amount computed under paragraph (a) of this subsection; or
(f) The higher of a refund of the member’s accumulated account balance as described in KRS § 61.625(1) or one (1) time lump-sum payment which shall be the actuarial equivalent of the amount payable under paragraph (a) of this subsection for a period of sixty (60) months.
(3) If the beneficiary eligible for benefits as provided by subsection (1) of this section are multiple beneficiaries or a trust, then the multiple beneficiaries by consensus or the trustee may elect to receive the actuarial equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section using the assumption that the beneficiary’s age is the same as the member’s age.
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is the member’s estate, then the beneficiary shall receive the higher of a refund of the member’s accumulated account balance as described in KRS § 61.625(1) or the one (1) time lump-sum payment payable under subsection (2)(f) of this section, using the assumption that the beneficiary’s age is the same as the member’s age.
(5) Payments of taxable distributions made pursuant to this section shall be subject to state and federal income tax as appropriate.
Effective: June 29, 2021
History: Amended 2021 Ky. Acts ch. 96, sec. 9, effective June 29, 2021. — Amended
2018 Ky. Acts ch. 107, sec. 36, effective July 14, 2018. — Amended 2013 Ky. Acts ch. 120, sec. 64, effective July 1, 2013. — Amended 2010 Ky. Acts ch. 173, sec. 6, effective July 15, 2010. — Amended 2009 Ky. Acts ch. 77, sec. 18, effective June 25,
2009. — Amended 2004 Ky. Acts ch. 36, sec. 22, effective July 13, 2004. — Amended
1998 Ky. Acts ch. 154, sec. 68, effective July 15, 1998. — Amended 1996 Ky. Acts ch. 167, sec. 16, effective July 15, 1996. — Amended 1994 Ky. Acts ch. 485, sec. 20, effective July 15, 1994. – Amended 1992 Ky. Acts ch. 240, sec. 39, effective July 14,
1992. — Amended 1986 Ky. Acts ch. 90, sec. 19, effective July 15, 1986. — Amended
1982 Ky. Acts ch. 423, sec. 10, effective July 15, 1982. — Amended 1976 Ky. Acts ch. 321, sec. 28. — Amended 1974 Ky. Acts ch. 128, sec. 25. — Amended 1972 Ky. Acts ch. 116, sec. 47. — Amended 1966 Ky. Acts ch. 35, sec. 12. — Amended 1964
Ky. Acts ch. 86, sec. 6. — Amended 1962 Ky. Acts ch. 58, sec. 18. — Amended 1960
Ky. Acts ch. 165, Part II, sec. 13. — Created 1956 Ky. Acts ch. 110, sec. 27.
Legislative Research Commission Note (6/29/2021). 2021 Ky. Acts ch. 96, sec. 12 provides that the amendments to KRS § 61.640 in 2021 Ky. Acts ch. 96, sec. 9 are retroactive to June 25, 2009.
Legislative Research Commission Note (12/13/2018). On December 13, 2018, the
Kentucky Supreme Court ruled that the passage of 2018 SB 151 (2018 Ky. Acts ch.
107), did not comply with the three-readings rule of Kentucky Constitution Section
46 and that the legislation is, therefore, constitutionally invalid and declared void. That ruling applies to changes made to this statute in that Act.