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.

Advisor Insight

Gage DeYoung, CFP®
Prudent Wealthcare LLC, Aurora, CO

Assuming your parent elected a time certain pension option for payment at retirement and named you as beneficiaries, you and your siblings would be entitled to the continuing payments until the time certain period expires.

For example, if a parent elected a 20-year time certain pension option and passed away after 10 years from the date the pension started paying, his beneficiaries would be entitled to split the monthly payment for the next 10 years. It will be important to find out what election was made by your parent prior to the payment start date. Many corporate pensions only offer single life or joint life payment options. If that’s the case, the payments unfortunately stop at the passing of the original payee or the passing or the original payee and his spouse, respectively.