Disclaim 401K proceeds
Is it possible for a named spouse beneficiary of a 401(K) to disclaim the proceeds and pass the 401(K) proceeds to a teen-age non-blood relative dependent who lives in the household?
Is it possible for a named spouse beneficiary of a 401(K) to disclaim the proceeds and pass the 401(K) proceeds to a teen-age non-blood relative dependent who lives in the household?
Permalink Submitted by Alan Spross on Tue, 2010-11-09 22:24
The beneficiary can disclaim the proceeds but cannot re direct them. With a disclaimer, the proceeds go the contingent beneficiary(s) established prior to the date of death. If there is no contingent beneficiary named and the primary disclaims, the funds go to the default beneficiary per the plan provisions. That is usually the owner’s estate. If that happens and the desired beneficiary is the beneficiary in the will, they would receive the funds, but this is an inefficient way to proceed. The desired beneficiary should be named as contingent for the plan benefits.
Permalink Submitted by Lee Benson on Tue, 2010-11-09 22:34
Thank-you; we are looking at alternatives following the death of the 401(K) account holder.
Permalink Submitted by Alan Spross on Tue, 2010-11-09 22:44
Should mention that in order to name a non spouse primary beneficiary on a qualified plan, a married employee must get a waiver signed by the spouse. There is no such requirement for a contingent beneficiary, but thought I should disclose this in case you were thinking of naming the relative as primary.