Beneficiary Designation of Accounts

[LIBERTYKID]

Can a participant designate which accounts in a 401(k) plan to be given to a beneficiary? Such as "my Roth account under the plan goes to person A, and my pre-tax 401(k) goes to person B." I never thought this could be done as all distributions to participants or beneficiaries under 402(a) of the Code must be pro rata from a basis standpoint, and I am not sure how distributions to a beneficiary would differ (both are "distributees" under the Code); but if you think it is legal let me know.

[mbozek]

Can a participant designate which accounts in a 401(k) plan to be given to a beneficiary? Such as "my Roth account under the plan goes to person A, and my pre-tax 401(k) goes to person B." I never thought this could be done as all distributions to participants or beneficiaries under 402(a) of the Code must be pro rata from a basis standpoint, and I am not sure how distributions to a beneficiary would differ (both are "distributees" under the Code); but if you think it is legal let me know.

Beneficiary designations are determined by the plan document. A plan document could provide for different designations for different accounts as long the rules for spousal consent are complied with. I dont understand why you believe all distributions from the plan must have pro rata basis allocations. Under IRC 402A separate accounting and recordkeeping is required for Roth account because all contributions are after tax (i.e. have basis) and earnings will be distributed tax free after the later of 5 years and age 59 1/2.