401k with no beneficiary | Ed Slott and Company, LLC

401k with no beneficiary

We have a client who passed away on 02/19/2020 with a solo 401k with no beneficiary named. His will says everything goes to his trust. His wife and two sons (his only children) are the co-executors and co-trustees. In this capacity can they decide to roll the 401k account into beneficiary IRAs or would it need to go into the trust?

Since solo Ks are not subject to ERISA, I don't think his spouse is the deemed beneficiary as she would be with a 401k with employees. Further, even if a pour over will results in the plan balance being swept into the trust, the estate is still the 401k beneficiary and is not a designated beneficiary. Only designated beneficiaries or qualified trusts named on the plan beneficiary clause are eligible for direct rollovers to inherited IRAs. Therefore, while the trust will likely inherit the plan benefits, since the trust will not be qualified for look through because it was not named as 401k beneficiary, the trust will be subject to the 5 year rule if client passed prior to RBD, and the remaining LE of the client if he passed after his RBD.

Client passed away with no beneficiary named on Solo K.  Deceased remarried ex-wife shortly before death.  The will says the deceased's sons will get the Solo K proceeds.  If the above is correct, and the spouse is not automatically the beneficiary it sounds like the question of can she disclaim so the sons inherit is a moot point?  Looking to make sure we are interpreting the rules correctly.

Check the plan adoption agreement.  There is a good chance that the agreement makes the surviving spouse the beneficiary.  Mine does.


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