401k EDB and NEDB
If a 401(k) owner names a EDB and NEDB as 50/50 beneficiaries and the 401(k) account isn’t split after death prior to 12/31 of year following death, is the result that the EDB would be forced to take the least favorable distribution option? Meaning 10 year vs. stretch? What is the result should this occur. The EDB is a non-spouse. Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2025-09-03 13:34
Yes, the general rule is that if separate accounts, or in the case of a 401k separate accounting is not established for each beneficiary, the EDB would forfeit EDB status, and any annual beneficiary RMDs would be based on the oldest beneficiary.
For an IRA separate accounts generally mean a separate inherited IRA which will be obvious, but separate accounting in a 401k would not be obvious. A frequent question would be whether the 401k would establish separate accounting for the EDB if the EDB presented a death cert and contact data, while other beneficiaries did not. Therefore, an EDB should probably request a direct rollover to an inherited IRA in situations where other 401k beneficiaries may be procrastinating, cannot be located, etc.