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What happens if a retired parent is deceased with a retirement plan, how does one go about passing the funds onto the next of kin.?

May 12, 2012 by Trudy from Santa Clara, CA in  |  Flag
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3 votes

Sorry for your loss. George provides wise counsel. Filing soon may be important. My father passed away this past January. The executor, my brother, needed to take my Dad's will along with a certified death certificate to the local court to get a letter of testamentary within 10 days of my father's passing. Getting many copies of the death certificate is also good idea. Vanguard needed them to distribute my father's IRA and annuities. His civil service pension benefits stopped. If your parent had defined pension benefits (different than a 401k) the plan's administrator should inform you about listed beneficiaries continuing to receive benefits.

Comment   |  Flag   |  May 12, 2012 from Ridgefield, CT

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Trudy, who was listed as the designated beneficiary on the retirement account? That is the first question that needs to be answered.

Comment   |  Flag   |  May 14, 2012 from Atlanta, GA

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George Cones, JD Level 20

here are several possibilities in this scenario. Consider seeing an attorney and/or a tax adviser soon. Before you meet with them, be sure you get the following documents.

-the will if there is one,

-the Plan Summary Description for the 401(k) plan as well as any documentation the 401(k) plan administrator will provide (including the documents which list the beneficiaries for the 401(k).

-get many certified copies of the death certificate, you will find you need these every time you turn around,

-divorce decrees or other papers that would effect inheritance rights,

An attorney can help secure the "Letters Testamentary" or "Letters of Administration" which may be required depending on the complexity of your brother's estate and the laws of your state. Your parent likely had a beneficiary for his 401(k). If the beneficiary is his wife she could roll it into a spousal IRA or Beneficiary IRA. If the beneficiary is someone else or his wife and someone else, than they could roll out their portions into Spousal and/or Beneficiary IRAs. Please consult a tax adviser prior to making any decisions concerning the distribution of the property, as a misstep could cost the beneficiaries unnecessarily.

Comment   |  Flag   |  May 12, 2012 from Wilmington, DE

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It passes based on the named beneficiary(s) regardless of what the will says.

Comment   |  Flag   |  May 14, 2012 from Port Washington, NY

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The distribution of the qualified asset(ie. IRA) is also important. As was mentioned above, if you do not elect to take a full distribution(avoiding the 10% penalty but incurring Income Tax) you can opt for a Beneficiary IRA. This will allow you to take the funds out in 5 equal payments over 5 years or you can have your CPA calculate a distribution plan based on essentially a lifetime income calculation. If the parent who passed away was over 70 1/2 years old(ie. RMD status), that annual withdrawal must continue but can be modified based on the Beneficiary IRA owner's age. If there are ore than one named Beneficiary, each can select whatever option they like.

Comment   |  Flag   |  May 14, 2012 from Columbus, GA

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John Level 11

Sorry to hear of your loss, Trudy. If you have a recent statment for the decedend's 401k plan, you can call the administrator listed on there and tell them about his death, and ask them to notify the named beneficiaries. This will help get the ball rolling, and the company should reach out to his named beneficiaries on the plan.

Comment   |  Flag   |  May 14, 2012 from Seattle, WA

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