Beneficiary Distribution Options

[ERISA-Bubs]

Say a participant dies while in pay status -- he is receiving installments.  Once he dies, can the plan allow a beneficiary to change the form of payment, or is the beneficiary locked into whatever the participant chose?

What if the participant was not in pay status?  Can the plan allow the beneficiary to elect how he receives the payment?

Thanks!

[My 2 cents]

Not knowing the rules for 457 plans, I will answer based on my understanding of the rules under a qualified defined benefit plan. 

1.  It is virtually unheard of for a plan to allow any changes in the distribution option as elected once the participant has started receiving payments.  However, many plans will allow the beneficiary under a life and certain (or certain only) option to elect, upon the death of the participant, to commute the remaining certain payments (i.e., convert them to a lump sum equal to the present value of the remaining certain payments).

2.  With respect to what happens when the participant dies prior to benefit commencement, it is necessary to carefully review the provisions of the plan document.  The plan document may require payments under a specific form or may permit the beneficiary to choose among two or more alternatives.

[XTitan]

If you are talking about a 457(f) plan, then the beneficiary could not make changes at the time of death.  Payments upon death would either have to be specified in the plan or elected "up front" per the 409A election timing rules.