New Mexico § 46-3A-409 - Deferred compensation, annuities and similar payments

§ 46-3A-409. Deferred compensation, annuities and similar payments

A. As used in this section: (1) “ payment ” means a payment that a trustee may receive over a fixed number of years or during

the life of one or more individuals because of services rendered or property transferred

to the payer in exchange for future payments. The term includes a payment made in money or property from the payer's general assets

or from a separate fund created by the payer. For purposes of Subsections D, E, F and G of this section, “payment” also includes

any payment from any separate fund, regardless of the reason for the payment; and (2) “ separate fund ” includes a private or commercial annuity, an individual retirement account and a

pension, profit-sharing, stock-bonus or stock-ownership plan. B. To the extent that a payment is characterized as interest or a dividend or a payment

made in lieu of interest or a dividend, a trustee shall allocate the payment to income. The trustee shall allocate to principal the balance of the payment and any other

payment received in the same accounting period that is not characterized as interest,

a dividend or an equivalent payment. C. If no part of a payment is characterized as interest, a dividend or an equivalent

payment, and all or part of the payment is required to be made, a trustee shall allocate

to income ten percent of the part that is required to be made during the accounting

period and the balance to principal. If no part of a payment is required to be made or the payment received is the entire

amount to which the trustee is entitled, the trustee shall allocate the entire payment

to principal. For purposes of this subsection, a payment is not “ required to be made ” to the extent that it is made because the trustee exercises a right of withdrawal. D. Except as otherwise provided in Subsection E of this section, Subsections F and

G of this section apply and Subsections B and C of this section do not apply in determining

the allocation of a payment made from a separate fund to: (1) a trust to which an election to qualify for a marital deduction pursuant to Section 2056(b)(7) of the Internal Revenue Code of 1986 , as amended, has been made; or (2) a trust that qualifies for the marital deduction pursuant to Section 2056(b)(5) of the Internal Revenue Code of 1986 , as amended. E. Subsections D, F and G of this section do not apply if, and to the extent that,

the series of payments would, without the application of Subsection D of this section,

qualify for the marital deduction pursuant to Section 2056(b)(7)(C) of the Internal Revenue Code of 1986 , as amended. F. A trustee shall determine the internal income of each separate fund for the accounting

period as if the separate fund were a trust subject to the Uniform Principal and Income

Act. Upon request of the surviving spouse, the trustee shall demand that the person administering

the separate fund distribute the internal income to the trust. The trustee shall allocate a payment from the separate fund to income to the extent

of the internal income of the separate fund and distribute that amount to the surviving

spouse. The trustee shall allocate the balance of the payment to principal. Upon request of the surviving spouse, the trustee shall allocate principal to income

to the extent the internal income of the separate fund exceeds payments made from

the separate fund to the trust during the accounting period. G. If a trustee cannot determine the internal income of a separate fund but can determine

the value of the separate fund, the internal income of the separate fund is deemed

to equal four percent of the fund's value according to the most recent statement of

value preceding the beginning of the accounting period. If the trustee can determine neither the internal income of the separate fund nor

the fund's value, the internal income of the fund is deemed to equal the product of

the interest rate and the present value of the expected future payments as determined

pursuant to Section 7520 of the Internal Revenue Code of 1986 , as amended, for the month preceding the accounting period for which the computation

is made. H. This section does not apply to a payment to which Section 46-3A-410 NMSA 1978 applies.