How do my siblings and I receive inherited pension benefit payments from our deceased parent?
Sorry to hear of the passing of your parent.
Assuming a time certain pension option was elected by your parents, and you and your siblings were named as beneficiaries of the pension, you and your siblings would be entitled to the continuing payments until the time certain period expires. As an example, if a parent elected a 20-year time certain pension option as their choice for payments at retirement, named 3 children as beneficiaries, and passed away after 10 years from the date the pension started making payments, the 3 children would be entitled to split the monthly payment for the next 10 years. In this case, the children would contact the pension administrator to notify them of the parent's passing. The pension administrator would then confirm beneficiary information on file and make arrangements to update the payees of the pension payments.
It will be important to find out what election was made by your parent prior to the pension payment start date. Many corporate pensions may only offer single life or joint life payment options. When this is the case, unfortunately the payments stop at the passing of the original payee or the passing or the original payee and their spouse respectively.
Generally, the provisions of the plan document determine the distribution options available to beneficiaries of retirement plan assets. From a regulatory perspective, you are allowed to distribute the assets over the life expectancy of the oldest sibling. If the assets are allocated into separate accounts by December 31 of the year following the year your parent died, then each sibling is allowed to use his or her own life expectancy to calculate required minimum distribution amounts.
If your parent was retired but passed away before the required beginning date, then you have the option of receiving your payments over five years or less. But this will only apply if the beneficiary did not begin distributions using the life-expectancy method by December 31 of the year following the year your parent died.
To be sure of the options available to you and your siblings, check with the administrator for the defined-benefit plan.
This question was answered by Denise Appleby