How did South Carolina Revenue Ruling 93-12 calculate the historical retirement-income deduction for a surviving spouse?

Plain-English summary

South Carolina Revenue Ruling 93-12 allowed a surviving spouse to claim two separate historical retirement-income deductions when the survivor received both personal retirement income and retirement income attributable to a deceased spouse. Each deduction was limited to the retirement income in that stream and the applicable then-current $3,000 or $10,000 ceiling.

For income attributable to the deceased spouse, the survivor generally stepped into the deceased spouse's position. If the deceased spouse had chosen the $3,000 deduction, the survivor had to continue it. If the deceased spouse had elected to defer for the $10,000 deduction, the survivor could not claim that amount until the year the deceased spouse would have reached the applicable age. If the deceased spouse died before making an election, the survivor could make it.

The surviving spouse's own age and election controlled the separate deduction for the survivor's own retirement income. The ruling also applied higher eligibility ages to people born in 1943–1959 and after 1959 under the statute then in effect.

Common questions

Q: Could a survivor receive two deductions? Yes, one for personal retirement income and another for income attributable to the deceased spouse.

Q: Did the survivor's age control the deceased spouse's retirement stream? No. The ruling used the deceased spouse's election and the age the deceased spouse would have reached.

Q: What if the deceased spouse had not made an election? The surviving spouse could make the election for that retirement stream.

Citations and references

• S.C. Code Ann. § 12-7-435 (1992 Supp.) — historical retirement-income deduction, surviving-spouse extension, qualified plans, elections, and age rules
• Duke Power Co. v. South Carolina Tax Commission, 292 S.C. 64, 354 S.E.2d 902 (1987)
• Beaty v. Richardson, 56 S.C. 173, 34 S.E. 73 (1899)

Subject

Retirement Income of a Surviving Spouse

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR93-12.pdf

Original ruling text

SC REVENUE RULING #93-12 (TAX)

SUBJECT:

Retirement Income of a Surviving Spouse
(Income Tax)

EFFECTIVE DATE:

For taxable years beginning after 1992.

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-7-435 (Supp. 1992)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1992)
SC Revenue Procedure #93-6

SCOPE:

A Revenue Ruling is the Department of Revenue's official
interpretation of how laws administered by the Department are to be
applied to a specific issue or a specific set of facts, and applies to all
persons or a particular group. It is valid and remains in effect until
superseded or modified by a change in the statute or regulations or a
subsequent court decision, Revenue Ruling or Revenue Procedure.

INTRODUCTION:
Questions have arisen as to the retirement income deduction available to a surviving spouse for
taxable years beginning after 1992.
Following a discussion of the statute, examples have been provided in order to better explain how
the retirement income deduction under Code Section 12-7-435 applies to a surviving spouse.
Since the deduction for retirement income concerns taxable years beginning after 1992, the
examples below will reflect facts and circumstances that may occur in the future.
DISCUSSION:
Effective for taxable years beginning after 1992, Code Section 12-7-435 allows a taxpayer a
deduction from South Carolina taxable income, and reads in part:
(1)

Beginning with the taxable year in which a taxpayer first receives retirement
income, the taxpayer may:
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(A)

deduct his retirement income in an amount not to exceed three
thousand dollars annually; or

(B)

elect irrevocably to defer claiming a retirement income deduction
until the taxable year the taxpayer attains the age of sixty-five years,
at which time the taxpayer may deduct his retirement income in an
amount not to exceed ten thousand dollars annually.

(2)

A taxpayer who does not claim a retirement income deduction before the
taxable year in which he attains the age of sixty-five years is considered to
have made the election allowed pursuant to subitem (1)(B) of this item.

(3)

A taxpayer who has attained the age of sixty-five years before 1994 is
considered to have made the election allowed pursuant to subitem (1)(B) of
this item.

(4)

A taxpayer who in 1993 has not yet attained the age of sixty-five years and
who receives retirement income in 1993 may:
(A)

deduct his retirement income in an amount not to exceed three
thousand dollars annually; or

(B)

elect irrevocably to defer claiming a retirement income deduction
until the taxable year the taxpayer attains the age of sixty-five years,
at which time the taxpayer may deduct his retirement income in an
amount not to exceed ten thousand dollars annually.

(5)

The deduction allowed by this item extends to the taxpayer's surviving
spouse and, to the extent the surviving spouse receives retirement income
attributable to the deceased spouse, applies in the same manner that the
deduction applied to the deceased spouse.

(6)

For purposes of this item, "retirement income" means the total of all
otherwise taxable income not subject to a penalty for premature distribution
received by the taxpayer or the taxpayer's surviving spouse in a taxable year
from qualified retirement plans which include those plans defined in Internal
Revenue Code Sections 401, 403, 408, and 457, and all public employee
retirement plans of federal, state, and local governments, including military
retirement for persons with twenty or more years active military duty.
(Emphasis added.)

(8)

(A)

For a taxpayer born in the years 1943 through 1959, where subitems
(1), (2), and (4) of this item refer to age sixty-five, the applicable age
is sixty-six.

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(B)

For a taxpayer born after 1959, where subitems (1), (2), and (4) of
this item refer to age sixty-five, the applicable age is sixty-seven.

Where the words of a statute are clear there is no room for construction and such terms must be
given their literal meaning. Duke Power Co. v. South Carolina Tax Commission, 292 S.C. 64, 354
S.E.2d 902 (1987).
In Beaty v. Richardson, 56 S.C. 173, 180, 34 S.E. 73, 76 (1899), the Court stated the rule as follows:
"The legislature must have intended to mean what it has plainly expressed, and consequently there
is no room for construction... Where the words of a statute are plainly expressive of an intent, not
rendered dubious by the context, the interpretation must conform to and carry out that intent. It
matters not, in such a case, what the consequences may be."
In summary, a surviving spouse, with respect to the retirement income received, is allowed a
deduction for income received from his or her retirement plan or plans (if any) and a second separate
deduction for retirement income that is attributable to the deceased spouse (if any).
For each deduction allowed, the surviving spouse must deduct the lesser of the retirement income
received or $3,000.00, or the lesser of the retirement income received or $10,000.00, depending on
the election made.
With respect to the retirement income that is attributable to the deceased spouse, the surviving
spouse essentially "steps into the shoes" of the deceased spouse. Therefore, the surviving spouse:
(1) must take the same deduction the deceased spouse elected; or,
(2) is entitled to make the election available under the law if his or her deceased spouse had
not yet made the election. The deduction taken is based on the age of the deceased spouse
had he or she lived.
Finally, the first year of the election under this statute is 1993. Deductions taken in previous years
under the prior statute do not affect this election.

EXAMPLES AND CONCLUSIONS:
Example #1:
Facts: A surviving spouse receives retirement income from a plan attributable to a deceased spouse
and also receives retirement income from his or her retirement plan.
Conclusion: A surviving spouse, with respect to the retirement income received, is allowed a
deduction for income received from his or her retirement plan or plans and a second separate
deduction for retirement income that is attributable to the deceased spouse.

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Example #2:
Facts: A surviving spouse, age 67, receives $15,000.00 retirement income from a plan attributable
to a deceased spouse who was 69 years of age at the time of death. On the 1995 tax return filed prior
to death, the deceased spouse had elected to take the $10,000.00 retirement income deduction
allowed under the law. The surviving spouse is also receiving $8,000.00 retirement income from his
or her retirement plan and on the 1997 tax return the surviving spouse elected to take the $10,000.00
retirement income deduction allowed under the law.
Conclusion: A surviving spouse, age 67, receiving $15,000.00 retirement income from a plan
attributable to a deceased spouse, who was 69 years of age at the time of death, must take the
$10,000.00 retirement income deduction allowed under Code Section 12-7-435 if, on the 1995 tax
return filed prior to death, the deceased spouse had elected to take the $10,000.00 retirement income
deduction allowed under the law.
The surviving spouse is also entitled to another retirement income deduction of $8,000.00 with
respect to income received from his or her own retirement plan. Even though the surviving spouse
had elected the $10,000.00 retirement income deduction, he or she is only entitled to a deduction of
$8,000.00 since the deduction is limited to the lesser of the retirement income received or
$10,000.00.
Therefore, the total deduction allowed the surviving spouse is $18,000.00 - a $10,000.00 deduction
for retirement income attributable to the deceased spouse and an $8,000.00 deduction for retirement
income attributable to the surviving spouse.
Example #3:
Facts: A surviving spouse, age 68, receives $15,000.00 retirement income from a plan attributable
to a deceased spouse who was 58 years of age at the time of death. On the 1993 tax return filed prior
to death, the deceased spouse had taken the $3,000.00 retirement income deduction allowed under
the law.
Conclusion: A surviving spouse receiving $15,000.00 retirement income from a plan attributable to
a deceased spouse must take the $3,000.00 retirement income deduction allowed under Code Section
12-7-435 if, on the 1993 tax return filed prior to his or her death, the deceased spouse had taken the
$3,000.00 retirement income deduction.
Example #4:
Facts: A surviving spouse, age 61, receives $15,000.00 retirement income from a plan attributable
to a deceased spouse who was 69 years of age at the time of death. On the 1995 tax return filed prior
to death, the deceased spouse had elected to take the $10,000.00 retirement income deduction
allowed under the law.

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Conclusion: A surviving spouse receiving $15,000.00 retirement income from a plan attributable to
a deceased spouse must take the $10,000.00 retirement income deduction allowed under Code
Section 12-7-435 if, on the 1995 tax return filed prior to his or her death, the deceased spouse had
elected to take the $10,000.00 retirement income deduction.
Example #5:
Facts: A surviving spouse, age 66, receives $15,000.00 retirement income from a plan attributable
to a deceased spouse who was 63 years of age at the time of death. On the 1995 tax return filed prior
to death, the deceased spouse had elected to defer claiming the $10,000.00 retirement income
deduction until he or she attained the age of 65.
Conclusion: A surviving spouse, age 66, receiving $15,000.00 retirement income from a plan
attributable to a deceased spouse, who was 63 years of age at the time of death, is not allowed the
$10,000.00 retirement deduction until the year in which the deceased spouse, had he or she lived,
would have reached age 65 if, on the 1995 tax return filed prior to death, the deceased spouse had
elected to defer claiming the $10,000.00 retirement income deduction until he or she attained the age
of 65. Beginning with the year the deceased spouse would have reached age 65, the surviving
spouse is allowed a $10,000.00 retirement income deduction for income that is attributable to
retirement plan of the deceased spouse.
Example #6:
Facts: A surviving spouse, age 59, receives $15,000.00 retirement income from a plan attributable
to a deceased spouse. Prior to death, the deceased spouse, age 62 at the time of death, had not yet
filed the tax return for the 1994 taxable year in which retirement income was first received.
Therefore, no election was made as to whether to take the $3,000.00 or $10,000.00 retirement
income deduction allowed under the law.
Conclusion: A surviving spouse receiving $15,000.00 retirement income from a plan attributable to
the deceased spouse may make his or her own election if, prior to his or her death, the deceased
spouse had not yet filed the 1994 tax return - the taxable year in which he or she first received
retirement income. In other words, if the surviving spouse elects to take the $10,000.00 retirement
income deduction with respect to retirement income attributable to a deceased spouse, the deduction
is first taken in the year in which the deceased spouse, had he or she lived, would have reached age
65.
IMPORTANT THINGS TO REMEMBER:
Additional Retirement Income Deduction - As stated in Examples #1 and #2, the surviving
spouses in Examples #3, #4, #5 and #6 are each entitled to another retirement income deduction of
either $3,000.00 or $10,000.00, depending on the election made, if the surviving spouse is also
receiving income from his or her own retirement plan or plans.

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Limitation on Retirement Income Deductions - If the retirement income received does not exceed
the maximum deduction allowed, the surviving spouse may deduct the lesser of the retirement
income received or $3,000.00, or the lesser of the retirement income received or $10,000.00,
depending on the election made.
Age Requirements for $10,000.00 Retirement Income Deduction - For a taxpayer born in the
years 1943 through 1959, the applicable age for the $10,000.00 deduction is sixty-six instead of
sixty-five. For a taxpayer born after 1959, the applicable age for the $10,000.00 deduction is sixtyseven instead of sixty-five.
SOUTH CAROLINA DEPARTMENT OF REVENUE
s/A. Crawford Clarkson Jr.
A. Crawford Clarkson, Jr., Chairman
s/T. R. McConnell
T. R. McConnell, Commissioner
s/James M. Waddell Jr.
James M. Waddell, Jr., Commissioner
Columbia, South Carolina
November 30
, 1993
For questions concerning the income tax deductions for retirement income, contact Research and
Review - Office Services Division at (803) 737-4867 or 737-4495 or John P. McCormack at (803)
737-4438.

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