What to do when a Newport account holder dies

Because a nonqualified deferred compensation plan is governed by IRC Section 409A, and the payment schedule was locked in before the money was ever deferred. In an NQDC plan the participant elects the form and timing of payment — a lump sum, or installments, at separation from service, a fixed date, or death — before the start of the deferral year. That election binds the beneficiary. The plan administrator cannot accelerate or restructure the schedule at death except within the narrow exceptions the 409A regulations permit, so a beneficiary can end up receiving payments for years. This is why an NQDC balance behaves nothing like a 401(k) in an estate: there is no rollover to an inherited IRA, no 10-year election, and no ability to cash it out to pay estate expenses. Ask the employer for the plan document or Summary Plan Description to see the exact schedule, and call Newport NQDC participant services at 800-230-3950.

There is a hard deadline most families miss. Under the IRS regulations at Treas. Reg. 1.401(a)(9)-4, a trust's underlying beneficiaries are only treated as the plan's designated beneficiaries if the trust is valid under state law, is irrevocable at death, has identifiable beneficiaries, and the required trust documentation reaches the plan administrator by October 31 of the calendar year FOLLOWING the year of death. Miss that date and the trust is not a designated beneficiary, which forces a faster payout. So: get the certified death certificate, contact the employer and Ascensus participant services at 888-652-8086, and deliver the trust agreement or certification of trust along with the trust's tax identification number well before that October 31. Also confirm what the plan actually pays: even a qualifying see-through trust is, for most non-spouse cases under the SECURE Act, still subject to the 10-year rule for deaths on or after January 1, 2020. A surviving spouse who is named individually rather than through a trust generally has more options — worth raising with a tax advisor before the trust route is locked in.

On an ERISA-covered qualified plan, generally no — not without your written consent on file. Federal law makes the surviving spouse the beneficiary of a qualified plan by operation of law, and a designation naming someone else is only effective if the spouse consented in writing. The Ascensus QRP Designation of Beneficiary (Form 481) reflects this: the spousal consent block must be signed by the spouse and WITNESSED by a notary public or a plan representative, and a separate waiver covers the Qualified Pre-Retirement Survivor Annuity, which Form 481 says applies to all money purchase pension, defined benefit, and target benefit plans, and also to profit sharing and 401(k) plans unless the employer elected the REA Safe Harbor. Ask the plan administrator whether a signed, witnessed spousal consent is in the file. Two other things to ask in the same call: whether a qualified domestic relations order from an earlier marriage is on file against the account, and whether the plan is actually ERISA-covered — a governmental 457(b) is not, and the spousal-consent rule does not apply to it. Call 888-652-8086 for a former Newport qualified plan.