divorced with minor 401k beneficiary

[Krissy808]

I was divorced from my husband in 1998. We have two minor children. He died in 2000. He named minor children as beneficiaries on his 401k which he had only a short time. My question is, since I was not named beneficiary and the children are minors, can I request lump sum payments be made to them. Can I request the account be liquadated and the checks be made to the children and sent to our address? Also what are the tax penalties for that? I received a letter from his company stating that I needed to open an account naming children as beneficiary to the 401. I just wanted to receive checks instead of opening account, is this possible?

 

[ALawyer]

If the kids are minors, the money is theirs and the cpmpanies will not and the courts will not let the companies pay you the money as a parent.

 

[Krissy808]

I do not wish to receive their money. I want to know if they can receive checks in the mail instead of opening an account? They are minors and I am their parent.

 

[advisor10]

3-5-2002

DEAR KRISSY:

(1) How much money are the children receiving?

(2) Was your husband remarried to someone else at the time of his death, and is she receiving anything from the 401K?

There shouldn't be any problem with you receiving the checks by mail (if possible, you should ask or request that they be sent by certified mail, so you can sign to prove you received them and to also protect them from being lost in the mail), if you make such a request to the company that is holding the money. Your questions about lump sum payments imply that you don't know whether your children will be receiving monthly installments or a lump sum (I'm guessing that the checks will be for a lump sum, perhaps of a few thousand dollars).

You would need to talk to a local CPA or tax accountant to find out if there are any tax obligations, federal or state.

What are your plans for this money? Any bank could help you set up an account where the money could be invested to grow for the future (if perhaps you wanted them to use that money for their college education or gift it to them when they marry, etc.). Your name could also be on the account as guardian only.

I'm wondering if the 401K company is requesting that an account be opened so that they can send you the money in the safest way, which is by automatic direct deposit (after you have the account set up and know what the account number is).

It sounds as if you may not have a complete understanding of what you will be receiving from the 401K company. You can ask them any of the questions you have mentioned here, if necessary.

SINCERELY,

advisor

 

[Krissy808]

My ex husband did not remarry. The 401k only has a couple thousand. His former employer whom the plan was through was his family. They dont like me, hence the problem in receiving 401k for children. He has been deceased since july 2000. I just dont feel they can legally tell me how to receive this money. Its to come 50% for each child, thats how my ex left it. I just want to do whatever it takes to get this money out of there possesion. My children shouldnt be punished for his family not liking me.

 

[advisor10]

3-5-2002

What they are asking does not seem unreasonable, and it doesn't look as if they are trying to make things difficult for you. They have to follow strict governmental rules and regulations on how they handle that 401K money.

 

[Krissy808]

Seems unreasonable to me since the I was first told to set up an account which I did then was told it had to be sent lump sum, then was just recently told again to set another account. Seems to me like I am getting the run around since I cant even get this resolved in a year and a ahalf time. Pretty soon there wont be any money left in the 401k since the account has been losing money and the children wont have anything to put aside for later in life. I dont need to know how reasonable it seems that they are treating us, I simply need to know the legallity on how to get this money out of their control. They shouldnt have any say on where my childrens money is.