20% withholding

[goldtpa]

Have a distribution due to death in a 401k. The bene is a trust. Due you withhold 20%? If so who gets credit for the withholding the decedent or the trust? Thanks.

[GMK]

My understanding is that if the trust is a "see-through" trust, then the persons who are beneficiaries of the trust are treated as designated beneficiaries of the plan.

Otherwise, the participant is treated as having no designated beneficiaries, and the payment goes to the trust, which is responsible for the taxes. If the trust, and not a person, is the beneficiary, then the distribution is not eligible to be rolled over. The 20% withholding applies to rollover-eligible distributions.

If the participant was at or over age 70-1/2 when she/he died, there's an RMD to the participant.