Retitling deceased ppt's acct in name of spouse as beneficiary

[Guest Amy Marie]

A participant in a 401(k) plan passes away, leaving her account balance to her spouse as her primary beneficiary. The spouse is 71, the participant was only 63. The spouse wants to leave the account in the plan as a means of deferring RMDs until the deceased would have reached 70 1/2.

The spouse is asking for the account to be retitled in his name so that he can make investment changes. First, as a non-participant, non-employee of the plan sponsor, can the deceased's account be retitled in the name of their beneficiary?

Can I allow the beneficiary to gain access to the account using the deceased's information (i.e. SSN) in order to make investment changes?

Can the beneficiary name their own beneficiaries if the account remains in the plan? Or will the account go to the deceased participant's contingent beneficiary(ies) if the primary beneficiary passes away before it is distributed from the plan?

Any thoughts are greatly appreciated!

[Bird]

I think the typical thing would be to retitle the account, indicating that it is for the benefit of the beneficiary.

If you've confirmed that someone is in fact the beneficiary, I would allow them to access the account to make investment changes; it is their account even if the retitling hasn't been completed.

And yes, I think most plans will allow a beneficiary to designate beneficiaries. Contingent is for when the beneficiary dies before the participant.

[david rigby]

Will a retitle require the RMD to reflect beneficiary age?

(I don't know, just asking. More to the point, the beneficiary should find out before requesting the change, but the PA is not his legal counsel.)

[masteff]

"retitle" is something of a misnomer. It's not like anyone has "title" to a retirement plan account. "transfer" is probably a better word. You "transfer" the account to the beneficiary's name and SSN. It's common practice to my knowledge. In some plans, it's done automatically after the beneficary has been determined (ie, it's not a choice the beneficiary makes).

Some plans use status codes to differentiate participants from beneficiaries. A for active participants, B for non-spouse beneficiary, Q for alternate payee under a QDRO, S for spouse beneficiary, T for terminated participant, etc.

When a 401(k) account is transferred to the beneficiary, it is important to note: 1) what type of beneficiary (spouse vs nonspouse) and 2) the original account owner's date of birth and date of death. Since 401(k) plans do not permit the spouse to "make the account their own" like they can with IRAs, you don't have to get into that mess. You simply determine the MRD using the proper methodology under the regulations.