401ok

Thank you for your input. The lump sum will come out this calendar year of death in a direct transfer to each named beneficiary's IRA. I understand that if it went to the beneficiary first then the entire amount would be taxed so it goes directly to their IRA's. Yes, the Beneficiary Designation form included check boxes and lump sum was checked rather than "Let beneficiary decide". And no there was no plan admin.. My brother was the admin, trustee, and sole employee of his S Corp which adopted the prototype plan and made the annual employer contributions that were then invested at the bank and brokerage. Thanks again.

Hi all you knowledgeable people. I am the executor and while I realize that my deceased brother's nontraditional 401(k) is not going through probate I still need to help. This is a profit sharing plan sponsored and contributed to by his sub S for his retirement and he is the only employee and sole participant filing a 5500-EZ. He died a few weeks ago prior to his RBD. No spouse. The plan was adopted in 1988 and includes a Beneficiary Designation Form naming his 2 children and checking the box "lump sum payment". Publ. 575 suggests that there are only two options, one of which is taking the distribution within 5 years. Yet I have read elsewhere that a lump sum needs to be taken by December 31st of the year following death. I need to know when to distribute via the 1099-R. If it needs to be a total distribution by the following year what is that Code Section citation please? To me lump sum means lump sum so how could Publ 575 say that there are only two options for non-periodic/total distributions. Do they really take a "lump sum" over 5 years which greatly reduces their tax burden?