Death of nonhighly compensation employee

A terminated 75 year old employee died prior to completing distribution forms.

It was her intention to take a lump sum distribution after paying  her RMD.

Since there are no papers to support this distribution, what should be done?

There is a living spouse.

The lump sum = $140,000

2023 RMD                18,000

Does her 2023 1099R show  158,000 with !8,000 taxable.

Or does the husband have a say regarding the distribution.

Any advice would be gratefully accepted

Plans do not run on undocumented intentions. You say there are no relevant documents submitted. What does the plan (and relevant participant documents, such as beneficiary designations) say about payment of benefits on the death of the participant, taking into account that the participant was subject to required distributions in 2023? 

Agree with QDROphile, the plan document currently contains language related to the death benefit.  At a minimum, the spouse would need to receive 50% of the J&50 survivor option.  Sometimes the spouse has the option to take this as a lump sum, but it would only be about 45% of the original lump sum value.   Many plans, especially "small plans", contain a more generous death benefit.  In small plan land the most common death benefit is the present value of the accrued benefit, which in essence is the same as the lump sum that was going to be paid to the participant.

Check the plan document, your answer is there.  If is the ERISA minimum (50% of the J&S) and the sponsor wants to pay the full lump sum, they can always amend the plan to provide it.  

You also need to deal with the MRD issue, which likely involves retro payments to the estate, with some tax implications that are beyond my pay grade.

11 hours ago, QDROphile said:

Plans do not run on undocumented intentions. You say there are no relevant documents submitted. What does the plan (and relevant participant documents, such as beneficiary designations) say about payment of benefits on the death of the participant, taking into account that the participant was subject to required distributions in 2023? 

My problem is the participant died prior to taking the 2023 RMD.

Does the deceased participant receive a 1099R showing the taxable RMD for 2023.

or does the husband receive the PVAB and then he would be responsible to report 2023 RMD?

Had the participant commenced RMDs prior to 2023? Or would 2023 be the first RMD year?

We're assuming the surviving spouse is the 100% beneficiary - is that confirmed?

1 hour ago, C. B. Zeller said:

Had the participant commenced RMDs prior to 2023? Or would 2023 be the first RMD year?

We're assuming the surviving spouse is the 100% beneficiary - is that confirmed?

Yes. The husband is 100% beneficiary.

2023 was the first year  deceased part. would receive RMD

Did participant terminate his employment in 2022 or 2023?

So the participant was working up until they died? As long as the plan document offers a lump sum option for the death benefit, then the beneficiary can take the lump sum, and use the account balance RMD method to calculate the amount that is not eligible for rollover.

4 hours ago, Egold said:

Yes. The husband is 100% beneficiary.

2023 was the first year  deceased part. would receive RMD

I was preparing the termination package for the terminated participant.

She died before I sent her the papers.

The plan allows a lump sum distribution.

Who receives the 1099R. The participant or the spouse? 

15 minutes ago, Egold said:

Who receives the 1099R. The participant or the spouse? 

If it was paid to the participant then the participant will receive the 1099-R.

If it paid to the spouse as beneficiary then the spouse will receive the 1099-R.

Not exactly your situation but close enough to illustrate - participant who is in RMD status dies during the year -

Example 1, participant received full RMD before dying then spouse rolls over remained before 12/31. Two 1099-R one to the participant for the RMD with code 7 under their SSN and one to the beneficiary under their SSN with code 4G for the death benefit rollover.

Example 2, participant does not receive RMD before death. Spouse beneficiary takes RMD then rolls over remainder to IRA. Two 1099-R both to the beneficiary under their SSN with one with code 4 for the RMD and one with code 4G for the death benefit rollover.

Thank you for your help