spousal beneficiary for qualified plan

[AKconsult]

Scenario - qualifed plan, male participant age 60 died, spouse is sole beneficiary. She wants to keep the account in the plan. Plan does not have J&S.

Document allows spouse beneficiary to postpone payments until spouse would have been 70 1/2.

Questions:

1. Document requires that if spouse beneficiary wants to be exempted from 5-year distribution rule, they must make election in writing. Does anyone know if there is a form for this or what it should say?

2. I believe that we should still keep account in the participant's name, not put in spouse's name. Does that sound right?

Thanks!

[J Simmons]

I would have the written election mention that the spouse acknowledges that she has the right to withdraw benefits upon request and that the plan allows her to postpone payout until the deceased employee would have reached age 70 1/2, then have it specify that she elects to postpone payout until the earlier of the time she requests payout or the deceased employee would have reached age 70 1/2.

The only reason I see for leaving the plan account bearing the deceased employee's name in the title would be for identifying that it is when the deceased employee would have reached age 70 1/2 (rather than when the spouse will) that is the latest date for payout, per the plan terms you mention.

[masteff]

Our plans used status code "B" for spouse beneficiaries and "C" for non-spouse beneficiaries. We had a specific field in which we stored the original participant's DOB. This way tax forms and such were properly reported to the beneficiary but we had the info necessary to figure age 70 1/2, etc. Unless you're doing tax forms manually, this is a real consideration.