Restricted Payments for Top 25 HCE

[Guest Not Amused]

Top 25 HCE died and benefit is equal to LS value of accrued. My understanding is that spouse can only get the monthly LA that would have been paid to the participant. Or spouse can defer payment until participant is no longer in the Top 25 or until the plan terminates with enough assets to pay all benefits. But spouse cannot defer beyond 12/31 of the CY when the participant would have attained 70-1/2 (per plan document).

Spouse is older than the participant so installments would probably extend beyond spouses life expectancy.

Is my understanding correct? Are there other rules I may be missing?

[Effen]

I believe death ends the top 25 restriction. In other words, if the participant dies, the spouse can receive the full benefit.You should read your document to make sure.

[rcline46]

I had the same problem earlier this year, but HCE was owner, and the answer was NO - restriction not removed (also a 436 restriction in the plan). Do a thread search on death restriction and see what you find.

[Effen]

I agree. Death of the participant does not seem to lift the restriction. Sorry about the mislead.

[SoCalActuary]

You should also investigate the use of an IRA account with restricted payment options as provided in 401(a)(4).