Death Benefits

[Guest Twinky]

Let me set up the scenario...

The participant was over 70½, was receiving RMD's. He passed away. He has no wife, and has listed 10 beneficiaries (i.e., nephews and neices, and friends).

Some beneficiaries have requested a rollover to a qualified plan, some have requested to be paid over a 5 year period, and some a lump sum.

The lump sum is simple enough.

The rollover to a qualified plan - it is my understanding that only a spouse can rollover death benefits...?

And I am unsure of the paid over 5-year period.

Could someone please clarify that only a spouse can rollover death benefits, and whether a beneficiary can receive payments over a 5-year period.

Thank you so much!

[Bird]

Under present law, no rollover to non-spouse bene. In 2007, they could roll to an inherited IRA.

If the participant was already receiving RMDs, then I believe the general rule is that they must continue at least as rapidly. I don't think the 5 year rule applies in this situation.

The plan may or may not allow the continuation of RMDs vs. the forceout in a lump sum.

Seems to me they should have been given option election forms limiting them to the choices permitted.

[Guest Twinky]

Thank you Bird!

When I read the document...to me, their options were; receive installments, purchase an annuity or take the lump sum. However, under the section where it talks about RMD's it states "if distribution of the Participant's benefit has begun and the Participant dies before his entire benefit has been distributed to him, the remaining portion of such benefit shall be distributed at least as rapidly as under the method of distribution being used as of the date of the Participant's death".

My understanding of that was...they could continue to receive RMD's (i.e., method being used as of the date of the Participant's death)....???

But when I asked my document service provider for clarification, they said that "at least as rapidly..." means since the plan offers "lump sum" that is the method that would have to be used because it is the most rapid.

So this is their only option????

Any help you can give would be most helpful.

Thanks!