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Mother, recently deceased. What happens to her retirement benefits?

Can provide private details if answered. Mother died Sept, 2013, Step dad also deceased. Funds were auto deposited. They lived in another state.

Oct 19, 2013 by Deborah from Rio Hondo, TX in  |  Flag
5 Answers  |  7 Followers
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8 votes
Peter C. Karp Level 20

Deborah,

I am sorry for your loss. There are a lot of complexities associated with the finances of an individual when they pass away and it is difficult to provide specific direction without more information. One of the first steps you should take is to review your mother’s will and trust documents to determine the beneficiaries and executor of the estate. You will also need to review all of her financial documents to identify what types of accounts she has, i.e. a pension, social security benefits, 401(k), IRA accounts, etc. Getting in touch with an attorney or experienced financial advisor would be beneficial to you in order to know who to contact and what documents you will need to provide in order to settle her estate. The other advisor responses have also provided good tips on how to proceed.

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3 Comments   |  Flag   |  Nov 01, 2013 from San Francisco, CA
shantell

my mother passed away January 28th of this year, and she was receiving money from retirement and she has 6 children what happens to her retirement money.

Flag |  Mar 02, 2015
shantell

My mother was also receiving annuity from my father when he passed away. I also wanted to know am I entitled to to the annuity funds as a savior daughter.

Flag |  Mar 02, 2015
Peter C. Karp

1)my mother passed away January 28th of this year, and she was receiving money from retirement and she has 6 children what happens to her retirement money. ANSWER: You will need to contact your mother’s former employer that she is receiving the retirement benefits from to determine who are the named beneficiaries. You should be able to get the contact number from a recent statement.

2) My mother was also receiving annuity from my father when he passed away. I also wanted to know am I entitled to the annuity funds as a savior daughter ANSWER: You will need to contact the insurance company that is providing the annuity payments to see what the options are or if the benefits cease upon her death. You can give us a call if you have additional questions.

Flag |  Mar 03, 2015 near San Francisco, CA

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6 votes

Hi Deborah, I'm sorry for the loss of your Mother.

If your mother had a pension (an annuity payment) then that benefit will stop since her spouse has also passed away. However, any cash balance plan, 401k, 403b, or other defined contribution plan where she put money in herself will go to the named beneficiary on the account. So that's your first step - find a statement - call the number on the statement - and first ask what the plan administrator requires of you. They may want a death certificate prior to even talking to you, or them might be a bit more liberal, depending upon the company.

If there is no beneficiary, then the assets will be distributed according to the will. They will not avoid probate, however, so they might be tied up for a little while depending upon who the executor of the estate is, and how quickly that person chooses to distribute the assets.

If you are the named beneficiary, then you will have a choice on how to receive the assets. You may receive them outright in a cash payment, or you may "roll" the assets into a Beneficiary IRA where you can take distributions from the account 1) all at once, 2) over a 5-year period, or 3) over the course of your lifetime based upon a beneficiary schedule that you can find in IRS Pub 590. (this is known as the "stretch"). Typically, employer retirement plans do not allow the "stretch" directly from the plan; they will require that you roll the money out to a Beneficiary IRA first.

Remember, it is likely that most if not all of the dollars in the account will be subject to income tax. So it is important for you to consider how much of the money you take out all at once. If the account is a large one (say over $100,000) then I suggest you consult with a Certified Financial Planer or a financial advisor that specializes in retirement planning and retirement income distribution. The tax bite of taking too much, or not taking enough (in the case of required distributions) can be pretty stiff, so you want to do it right.

Jon Castle http://www.WealthGuards.com

1 Comment   |  Flag   |  Oct 19, 2013 from Jacksonville, FL
Frances

my mother passed away 31/2 years ago my sister was handing her estate I received a letter from calpers stating my brother and sisters and I were beneficiaries with somethings to sign about with holding taxes so I signed it any way I got 2 payments from them and no more I asked my sister she said that was all we got ( my mom was receiving 3,800.00 or so a month from this ) Now I just got an email from my sisters lawyer asking me for my SS# for taxes I didn't give it to him because I don't know why they would need.. ?

Flag |  Apr 15, 2017

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3 votes

Hello Deborah,

I’m very sorry to hear that you lost your mother. I know that is hard.

I agree with the other advisors that more information is needed. If you are referring to a monthly pension payout from a previous employer then it is likely the payout will cease. But there is a chance a living beneficiary has been named to receive future benefits upon your mother's death. To find out contact the employer.

If you are referring to an annuity payout then the benefit may cease or it may continue for a specified period of time. In this case contact the insurance company to learn more.

If you are referring to a balance in a retirement plan or IRA then the balance will pass per the beneficiary designation assuming your mother completed one. The beneficiary designation is a document which instructs the plan custodian to distribute the balance at the death of the account owner to certain designated individuals or to their estate. There can be primary and contingent beneficiaries. If the primary beneficiary is deceased then the balance will go to the contingent beneficiaries. If the are named, living, beneficiaries the distribution will be made to an “Inherited IRA”, one for each beneficiary. If there is no beneficiary designation form completed then the balance will go to an IRA in the name of the Estate and be distributed per the wishes in your mother’s Will. This is the least beneficial scenario for tax purposes.

The beneficiaries have the choice of distributing the balance of the Inherited IRA immediately or withdrawing the money based on a complicated schedule that is contingent on whether or not individuals or the estate are the beneficiaries and whether or not your mother was making “required minimum distributions” from her retirement account. Generally faster distributions will accelerate income tax consequences. However, the distribution schedule is out of your control as there is little flexibility in the rules. You will want to speak to someone, like a CPA or Financial Advisor, who can guide you through the process. If a required distribution is not made the tax penalty is 50% of what should have been distributed. Obviously this must be avoided.

Like Jonathan said, find the statement and contact someone at the 800# to get the process started.

Comment   |  Flag   |  Oct 19, 2013 from Woodbridge, VA

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2 votes

Deborah, sorry to hear of your loss. There are a few steps to process in order to receive the benefits and assets of an deceased individual. Alot of it depends on who the executor of the estate is, who the beneficiaries are and what type of assets they are, ie; pension benefits, fixed benefits, 401k proceeds, bank accounts. Yes you are correct, more details are needed in order to provide better guidence . Hope this helps

Comment   |  Flag   |  Oct 19, 2013 from Asbury Park, NJ

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1 vote

Hi Deborah! I'm sorry for your loss. My colleagues have given good direction, so I won't expound on that. I do recommend that you retain at minimum legal help and if you can, an accountant and financial planner to help in settling this estate. There can be lots of paperwork that is confusing at best and undecipherable at worst. Professionals will help walk you through the process. Remember, settling an estate is a marathon, not a sprint, so take the time to do things correctly.

Comment   |  Flag   |  Oct 21, 2013 from River Hills, SC

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