401(k) beneficiary…
In the absence of a beneficiary form, our current 401(k) plan calls for the parents of a deceased employee to be the beneficiary. Can the parents waive the rights to the plan assets and have it go to the brother of the deceased? The deceased participant has no spouse or kids. (Beneficiary forms were lost by the new owner in a recent company purchase)
Permalink Submitted by Alan Spross on Tue, 2009-12-22 20:17
The parents are contingent beneficiaries in the absence of a spouse. A parental disclaimer would work if the plan provisions call for siblings to be the next in line and the brother is the only sibling. Another possibility of a disclaimer is that the employee’s estate is the next plan beneficiary and the employee’s will leaves his estate to the brother.
The parents might also push for a thorough search of the records if they think the brother was named as beneficiary, but the form was lost. That would save the expense of a disclaimer and the risk of unintended consequences. Of course, the amount in the plan would dictate how much legal funding to allocate to this and an attorney might be advisable if the disclaiming process was pursued. If the amount is modest, it just might be easier for the parents to take the RMDs or additional distributions and then gift the after tax amount to the brother. Up to 13,000 per year could be transferred this way. They would also have the option to convert the account to an inherited Roth IRA if this fits with their tax planning. A non spouse inherited 401k can be converted, but NOT an inherited IRA. There would still be RMDs required of the parents whether the inherited IRA was a TIRA or a ROth IRA or by the brother if he received the benefits through disclaimer.