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United Technologies Corporation Message Board

  • uacflyer uacflyer Jun 13, 2013 8:13 AM Flag

    Savings Plan Question

    When a UTC employee retires and chooses to remain in the savings plan, his/her account has named beneficiaries....usually the spouse is the primary benficiary. If the retiree dies before his/her spouse, can the surviving spouse choose to remain in the savings plan...or, upon death of the retiree is it it necessary for the spouse to to roll the savings plan 401(k) account into an IRA. That is, must the surviving spouse leave the UTC savings plan?


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    • Last time I checked the spouse can continue the 401k plan. She does not have to take the money. Any other beneficiary would have to receive the money and be subject to taxes. Things may have changed so best to check with the plan administrator.

    • Beneficiaries usually receive the proceeds of a 401k without having to go through probate (a process by which a court determines how an inheritance is dispersed). If estate taxes are due on the 401k, they must be paid before a beneficiary receives any proceeds. Each 401k plan has is own distribution rules so you'll want to study yours carefully.

      spouse who takes a lump sum 401k distribution may roll over the proceeds into her own IRA. She avoids paying taxes on the inheritance until she makes withdrawals. A nonspouse who takes a lump sum will owe state and local as well as federal income taxes on the distribution. While a nonspouse is not allowed to roll a 401k inheritance into his own IRA, he may be able to roll it into an inherited IRA distribution account and delay paying taxes until he makes withdrawals
      Time Frame
      If the 401k plan allows a beneficiary to take distributions over time, the tax consequences may be mitigated substantially. Some plans allow a beneficiary to spread payments over her lifetime based on her life expectancy. Other plans give the beneficiary the choice of either lifetime payments or payments within a specified number of years.
      If the owner of a 401k account designates multiple beneficiaries, he assigns a percentage of the proceeds to each beneficiary. Additionally, the plan holder may specify an individual who will inherit the 401k in the event of the primary beneficiary's death. The names of beneficiaries on a 401k should be reviewed regularly especially when a life change such as a birth or remarriage occurs.

      Above are general comments on 401-K's .....Kid

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