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Tricky Distribution Issue


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Curious how other people might be handling a situation we keep coming across. In these scenarios, a participant dies without a beneficiary so it defaults to the estate. The Account balance is relatively low (usually under $5k) and no one is willing to accept the benefit because either (1) the cost to probate the estate exceeds the value of the benefit and the state does NOT allow small estate affidavits, or (2) the estate has already been probated (generally making it ineligible for small estate affidavit) and the cost to reopen the estate exceeds the value of the benefit.  How do we get these assets distributed without subjecting the plan to significant risk?

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Not sure about retroactive application, but how about amending the plan for a defined hierarchy of beneficiaries when none is named or predeceases the participant? Then make the estate last in line, such as spouse, children, parents, grandchildren, grandparents, siblings, and then the estate? Could even stretch to aunts/uncles and nieces/nephews but those would be more difficult to track as they are usually not named in an obituary.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services


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A plan’s administrator might want its lawyer’s advice about these and other points.

If no one has submitted a claim, there might be no claim for the administrator to approve or deny.

Absent a claim, there might be no need to consider an involuntary distribution until the plan’s applicable required beginning date approaches.

Depending on the plan’s provisions and the factual circumstances, that time might be about ten years after the participant’s death.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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