What happens if a terminated employee dies before taking a full distribution of assets from the retirement plan?
Regardless of the reason for separation from the employer, an employee remains a participant of the plan so long as his/her assets remain with the plan. Therefore, should the former employee pass away prior to withdrawing all funds from the plan, the beneficiary(-ies) of the employee would then be eligible to receive the benefit under the rules of a standard death benefit claim. In most cases (subject to the provisions of the plan document), the entire remaining account balance would become fully vested and all eligible beneficiaries would be required to complete the necessary paperwork to process the distribution.
Related Questions
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