401(k) Beneficiary Question
Fact Pattern:
Thankfully this is not my client. Referred to me for assistance by their CPA.
(1) Female employee of the Archdiocese of New Orleans dies. Participant in their 401(k) plan.
(2) Beneficiary form cannot be located. We assume it would have named all her children equally as the primary beneficiary( her will stipulates all of her property is to be distributed equally among her children.
(3) If no beneficiary form is found, the proceeds will be distributed to the estate, and therefore taxed as ordinary income. Archdiocese has no beneficiary form on record. What if the Archdiocese misplaced or lost the form(?)
Is there any way for the children to contest this situation to the IRS based upon intent if no form can be found?
Permalink Submitted by Alan - IRA critic on Mon, 2022-05-02 19:34
The IRS would not take up this issue. If the decedent kept some form of documentation, the estate might retain an attorney to request a beneficiary change post death from the Archdiocese, but unless the documentation is compelling, this would probably not warrant the additional legal fees. If there had been a designated beneficiary on the plan, then direct rollovers to inherited IRAs would have been possible, and the 10 year rule would apply with taxes at the personal ordinary income rate of the children. With the estate as beneficiary, there will likely be a lump sum distribution fully taxable in the year of distribution, and the estate would pass the income through to the beneficiaries to report on their respective returns. If EE passed after RBD, the balance could be distributed over the remaining LE of the participant, but almost all plans will require a lump sum distribution instead.