Death Distribution to non-spouse beneficiary

[Guest curmudgeon]

The plan participant who died was under 70.5 so no RMD issues exist. The non-spouse beneficiary wants to delay the distribution of the death benefit. The plan only allows for lump sum distributions, and the document states that the benefit will be paid "as soon as administratively feasible". How much risk is there if the plan sponsor delays payment?

[flosfur]

A non-spouse beneficiary "must" receive the distribution of the account balance under one of the following two methods:

(1) within 5 years after death (year containing the 5th anniversary of the death)

or

(2) over the life of the beneficiary or over the life expectancy of the beneficiary, starting with the year following the participant's death.

See IRC S410(a)(9)(B)(ii) & (iii) and regulations.

[QDROphile]

Failure to follow plan terms will disqualify the plan.

[david rigby]

On what basis would the plan administrator (rather than the plan sponsor) rest for "creating" a delay? Making the payment on January 1 instead of December 31 may not violate plan terms, but anything that is not reasonable ("as soon as administratively feasible") would likely put the PA in a bind.

[rlb64]

Why can't you just amend the plan?