Distribution to Non-Spouse Beneficiary

[Guest TracyAndrews]

In a traditional 401(k) Plan, we have a participant who passed away and never changed her beneficiary from her ex-husband.

Therefore according to the singed beneficiary form, he is entitled to her benefit, but not to roll it over since they were no longer married. According to the Plan Document, he must have money out of the Plan by fifth anniversary following the participant's death.

Does he have any other payment options available to him as a non-spouse (ex-spouse) beneficary?

Just curious if anyone can guide me to the proper source. Thank you.

[QDROphile]

The plan terms are the sole source for determining benefit payment options unless you are open to the idea of amending the plan. If you are, start with section 401(a) (9) of the Internal Revenue Code and related regulations.

[Bird]

The law permits systematic distributions over his life expectancy if they start by the end of the year following death. You already said that the plan only has the 5-year option, so this doesn't seem to be a choice unless the plan is amended.

However, the bene might be interested in pending legislation that would allow a non-spouse bene to roll over to an IRA and take systematic distributions from it. I am pretty sure it made it through both the House and Senate pension reform bills and is in conference right now.