When a 401(k) participant passes away, there are a few steps you need to take as the plan administrator. This article walks you through how to update the participant's status, share their beneficiary information with Gusto Retirement, and help the beneficiary claim their funds. We understand this is a difficult time, and we're here to make the process as clear as possible.
The first step is to update the deceased participant's status to Dismissed in payroll. For steps on how to do this, see How to update the status of a dismissed employee.
We'll need the contact information for the participant's beneficiary. Any contact information you have for the participant's family is also helpful. Please share this with Gusto Retirement as soon as possible.
If the participant did not designate a beneficiary, the default beneficiaries are distributed in the following order:
Surviving spouse
Children (split equally)
Parents (split equally)
The participant's estate
For more information, see the summary plan description.
You can share our guide on how beneficiaries can claim funds for a participant who passed away with the participant's family. This guide walks beneficiaries through the steps to request a distribution from the account.