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April 5, 2021

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EBECatty created a topic in Distributions and Loans, Other than QDROs

Options for Missing Beneficiary

"Would appreciate any thoughts on the following. An ongoing governmental defined benefit plan provides a small death benefit (under $5,000) upon the participant's death in various scenarios. There is an order of payment (spouse; named beneficiary; children; estate). However, in some cases, the sponsor is (1) unable to contact a beneficiary, but believes they have the beneficiary's correct information, (2) is unable to identify the correct beneficiary at all, or (3) is unable to obtain a name, address, valid SSN, etc. for someone they believe may the correct beneficiary. Assume no relevant state law, no representative has qualified on the estate, and that the sponsor has conducted a diligent and reasonable search under the circumstances. Under scenario (1), I believe they could forfeit the death benefit subject to reinstatement, force an IRA rollover, or possibly escheat. What are valid options under scenarios (2) and (3)? My understanding is a forced IRA rollover would require establishing an IRA in the beneficiary's name, which may not be known (or may be suspected but an SSN not known). Same with escheating, which would require withholding and 1099-R reporting. Does this leave forfeiture and reinstatement as the only alternative as it requires no taxation, withholding, or reporting?"

4 replies   |    29 views   |    Add Reply

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