401 k in which the decedent did not name a beneficary
Please advise on what the IRS rule is for distribution of a 401k plan @ $375,000 in which plan had no listed beneficiary. decedent has a will and names 7 people as the beneficiaries of his estate. Should I setup an Inherited IRA FBO Decedent, request the check be made payable to this inherited IRA? If so when do I have to disburse the money and do the beneficiaries pickup the income as Income in Respect of Decedent. Please help.
Permalink Submitted by Alan - IRA critic on Tue, 2014-10-14 23:23
First you need to determine what the plan document says regarding default beneficiaries. If married, the surviving spouse is deemed the default beneficiary in most cases, but will assume decedent is single. If it turns out the estate is the beneficiary, the plan is still not forced to offer a direct rollover to an inherited IRA of the estate. See the attached article regarding estates as beneficiaries of a qualified plan vs an IRA. For a qualified plan, the consequences are usually greater. So check with the plan administrator to determine what the options are. Beneficiaries will be taxed on what they receive as IRD as the estate passes through the plan distributions to the 7 beneficiaries.