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Plus your own additional time researching, and the $100 (+) is a 100% probability, whereas the $800 is a tiny probability, at best. I'm saying pay it to the mother effectively as the executrix, not as the beneficiary. (It's not eligible for rollover since there is not a named beneficiary; she can waive the WH.) Suppose there's another estate beneficiary...we know that there were funeral expenses that are costs to the estate that would eat this money up, so nobody is netting anything out of it anyway. Ask me tomorrow and I might have another opinion, but today it seems silly to do otherwise. P.S. I don't like the plan language naming the estate as the default; it's basically not making a decision which in turn makes things harder when you wind up here.

Under section 1.401(a)(9)-4, Q & A 4, the designated beneficiary must be a beneficiary on the date of the death of the employee and remain a beneficiary as of September 30th of the calendar year immediately following the calendar year of the employee’s death. I take that as saying that if the primary beneficiary isn't alive on 9/30 of the following year, then the contingents become the primaries. 1) You're overlooking subparagraph © of that Q&A-4. 2) That Q&A has to do with the specially defined term "designated beneficiary". It is possible under Q&A-3 of that same section to have no "designated beneficiary". A "designated beneficiary" is defined for purposes of 401(a)(9) (see Code 401(a)(9)(E)), not for purposes of plan inheritance. 3) As asked above, what does the plan say? If it doesn't provide for a delay after death in determining the beneficiary (such as no later than Sept of the following year or at the time the beneficiary's interest is moved to a separate account or distributed), then I don't see how you could delay. Edit: Just noticed that (c ) of that Q&A-4 says in part "without regard to the identity of the successor beneficiary who is entitled to distributions as the beneficiary of the deceased beneficiary". Which clearly indicates the Service did not intend that determination of the heir/beneficiary is delayed with the determination of the "designated beneficary".

Keep in mind the two years apply "ONLY" in the event the individual isn't exempted from the 10% early distribution penalty. Hence, if the individual is age 59 1/2, then there isn't a two year period. Just a little clarification. But, I agree with everything you stated. Good Luck!

If it's a SIMPLE IRA and the SIMPLE has been funded this year (2013) then they must wait until 01/2014 to start a 401(k) Plan. At that point, you're just terminating the SIMPLE and starting fresh with a 401k. SIMPLE account holders may rollover their SIMPLE to the 401k (provided it's been two years since the initial deposit).

At the very least, research the rules of intestate succession in your state. You can get an overview here: http://www.nolo.com/legal-encyclopedia/intestate-succession You might be able to find other free legal resources in your area that would save you the expense but provide trustworthy info. I would start by asking the mother if the participant has a living father (ie the other parent), siblings (half or whole), children or grandchildren (as mention in a recent forum thread, you might review the obituary for clues as well). Then I would take those facts to a local attorney and pay for 1/2 hour of time to be told how your state's intestate succession rules apply. Also ask about small estate affidavit. Then require the appropriate person(s) to complete the affidavit if applicable and distribute. Your risk is $100 to an attorney vs $800 to another heir. Edit: Example of why intestate succession matters: if I died in Oklahoma where I live, my mother would get everything. but if I moved to Missouri and died, my mother and my brother would split equally.

I have. We picked up a client a few years ago in a similar situation after the DOL came to visit. We worked out a correction and had it approved by the DOL. About 6-8 months after everything had been repaid, there was a criminal investigation and grand jury. He was offered basically deferred adjudication and his attorney was trying to get the matter closed without it. Many months go by and it seemed the attorney was successful. Then, a new prosecutor was assigned and is seeking criminal charges again. The Forms 5500 are one of the issues involved. The prior TPA prepared Forms 5500 showing no PT and the client signed them and filed them. Apparently, the prior TPA is being considered a co-conspirator. My suggestion is to correct the PT ASAP and pay the excise taxes. Report it properly on the Forms 5500 for all affected years. Then, tell the client to hope it doesn't become a criminal matter. And, charge by the hour!

Was this person otherwise eligible to take a distribution? When did this happen? '12 or '13? If '12, did someone do a 1099? 945? Clients! Nuthin' but trouble, I tells ya!