§ 65.102. Application of the deduction.
(a) Unless otherwise excluded from deductibility under this chapter, any pension payment received by a claimant with respect to a week for which the claimant receives unemployment compensation (UC) benefits shall be deducted from the weekly benefit amount otherwise payable to the claimant for that week.
(b) Deductible pensions include a governmental or other pension, retirement or retired pay, annuity or any other similar periodic payment which is made under a plan maintained or contributed to by the claimant’s base period or chargeable employer and is based on the claimant’s previous work.
(c) Similar periodic payments shall include all deductible pension payments made on other than a weekly basis which shall be prorated into a weekly amount before being deducted from the weekly benefit amount payable to the claimant.
(d) The Department will not deduct pensions paid under the Social Security Act (42 U.S.C.A. § § 301—1397jj) or the Railroad Retirement Act of 1974 (45 U.S.C.A. § § 231—231u), if the claimant contributed to the pension in any amount, and will not deduct Social Security payments that are not based on the claimant’s previous work, such as Suppplemental Security Income.
(e) If the pension is entirely contributed to by the employer, 100% of the prorated weekly amount of the pension will be deducted from the weekly benefit amount payable to the claimant.
(f) If the pension is contributed to by the individual, in any amount, 50% of the prorated weekly amount of the pension will be deducted from the weekly benefit amount payable to the claimant.
(g) The weekly benefit amount payable to the claimant will not be reduced below zero by the prorated weekly amount of the pension.
(h) For any week with respect to which the claimant is not receiving but is eligible for a pension, the Department will not deduct the prorated weekly amount of the pension from the weekly benefit amount payable to the claimant.
(i) If, as a result of the claimant’s ineligibility to receive a pension payment under a pension plan, the claimant receives a payment which represents only a return of the claimant’s own contributions to the plan and does not include any contribution from a base period or chargeable employer, the payment is not a pension and will not be deducted from the weekly benefit amount payable to the claimant.
(j) The Department will not deduct pension payments if the services performed by the individual during the base period or the remuneration received for those services from a base period or chargeable employer did not affect the individual’s eligibility for, or increase the amount of, the pension.
(k) The Department will not deduct periodic payments which are made under severance agreements, profit sharing arrangements or disability plans administered by a union, employer, workers’ compensation carrier, insurance company or the Veterans Administration, unless the payments are based on retirement and fulfill all other prerequisites specified in this chapter.
(l) The Department will not deduct lump sum pension payments which represent the transfer of ‘‘eligible rollover distributions’’ from a ‘‘qualified trust’’ to an ‘‘eligible retirement plan,’’ as those terms are defined in section 402(c) of the Internal Revenue Code (IRC) (26 U.S.C.A. § 402(c)).
(1) If all of the requirements of section 402(c) of the IRC are met, including the transfer of the payments into an ‘‘eligible retirement plan’’ within 60 days of receipt by the individual, those payments do not represent a payment to the individual for the purposes of retirement and are not received by the individual under section 404(d) of the law (43 P. S. § 804(d)) and section 3304(a)(15) of the Federal Unemployment Tax Act (26 U.S.C.A. § 3304(a)(15)) (FUTA).
(2) If a distribution, or any part thereof, does not meet the requirements of section 402(c) of the IRC, the Department will deduct the prorated weekly amount of that portion of the lump sum payment which is received by the claimant in accordance with § 65.108 (relating to rules of attribution).
(3) If a claimant does not roll over the entire lump sum into an eligible retirement plan, as set forth in paragraph (1), the Department will determine the amount to be deducted from the claimant’s weekly benefit amount by dividing the amount of the lump sum payment that is received by the claimant by the total amount the claimant could have received had the claimant opted to take the entire lump sum available to the claimant. That quotient represents the deductible share of the lump sum pension amount received by the claimant. The claimant’s unreduced monthly pension is the amount the claimant could have received each month had the claimant opted to take periodic payments in lieu of a lump sum. The Department will calculate the deductible portion of that unreduced monthly amount by multiplying it by the quotient representing the deductible share of the lump sum which is received by the claimant. Using the deductible amount of that monthly pension, the Department will compute the prorated weekly deductible amount in accordance with § 65.108.
(4) If a claimant presents documented proof to the Department that the claimant has rolled over a portion of a deductible lump sum payment into an eligible retirement plan within 60 days, so that all or some of that lump sum payment is not subject to Federal Income Tax, the Department will credit the claimant for any amount deducted from the claimant’s UC benefits which is properly exempt from deduction because it is attributable to the transfer of the funds into an eligible retirement plan.
Source The provisions of this § 65.102 adopted July 1, 1969; amended November 8, 1974, effective November 9, 1974, 4 Pa.B. 2358; amended September 3, 1976, effective September 4, 1976, 6 Pa.B. 2107; amended January 2, 1998, effective January 3, 1998, 28 Pa.B. 21; amended February 11, 2011, effective February 12, 2011, applies to weeks of unemployment ending on or after December 16, 2005, 41 Pa.B. 848. Immediately preceding text appears at serial pages (239417) to (239418) and (337169).
Notes of Decisions
Excluded Contributions
Employer’s temporary disability salary continuation plan, fully paid and maintained by the employer, was specifically excluded as a deduction by this regulation. York Cable Television, Inc. v. Unemployment Compensation Board of Review, 654 A.2d 270 (Pa. Cmwlth. 1995).
Cross References This section cited in 34 Pa. Code § 65.105 (relating to lump-sum retirement payments).
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