Non-Spouse Beneficiary

[Guest A_Dude]

Federal Income Tax Withholding.

If you receive, rather than roll over, the distribution, you may elect whether to have federal income tax withholding apply to your death benefit distribution. If you do not wish to have any income taxes withheld on your distribution, or you wish to have an amount other than 10% withheld, you will need to sign and date IRS Form W-4P, checking the box opposite line 1. The Plan Administrator will provide you with Form W-4P. If you do not return the Form W-4P to the Plan Administrator prior to the distribution, the Plan Administrator will treat the failure to return the form as an affirmative election to have 10% withholding apply.

Special tax treatment if the deceased participant was born before 1936.

If your distribution is a "lump-sum distribution," and the deceased participant was born before 1936, you may elect special tax treatment. A lump-sum distribution is payment of your entire death benefit (including any nontaxable portion of your distribution) under the Plan (and certain similar plans maintained by the Employer) made within one calendar year.

Ten-year averaging

. If you receive a lump-sum distribution and the deceased participant was born before 1936, you can make a one-time election to figure the tax on the lump-sum distribution under "10-year averaging" using 1986 tax rates. Ten-year averaging often reduces the tax you owe.

The participant wad born in 1929, was receiving RMDs, and was not a participant in the plan until 1987. This IRS language doesn't specify that participant had to be a participant prior to 1986 though... What are your thought's on the non-spouse benficiary being able to use the 10 year averaging?