Participant started installment payments in a 457(b) top hat plan (tax exempt employer), and then the participant died. The beneficiary is asking about options. Does the beneficiary need to continue the installments (assuming they meet RMD rules)? or can they choose to take a lump sum distribution.
my concern is the language in Treas Reg 1.457-7(c)(2)(iv) since payments under the ppt's election started. Thanks!
(iv) Election as to method of payment. An eligible plan of a tax-exempt entity may provide that an election as to the method of payment under the plan may be made at any time prior to the time the amounts are distributed in accordance with the participant or beneficiary's initial or additional election to defer commencement of distributions under paragraph (c)(2)(ii) or (iii) of this section. Where no method of payment is elected, the entire amount deferred will be includible in the gross income of the participant or beneficiary when the amounts first become made available in accordance with a participant's initial or additional elections to defer under paragraphs (c)(2)(ii) and (iii) of this section, unless the eligible plan provides for a default method of payment (in which case amounts are considered made available and taxable when paid under the terms of the default payment schedule). A method of payment means a distribution or a series of periodic distributions commencing on a date determined in accordance with paragraph (c)(2)(ii) or (iii) of this section.
