Wednesday, June 01, 2011

What happens if someone dies before retiring; what about old vestings in employers?

I got a question this morning. If someone passes away before retiring, could his beneficiaries receive the pension benefit when he would have reached retirement age?

I suspect that varies on the company and union contract involved. But in general, defined benefit pensions pay less to the retiree if they offer “years certain” to designated beneficiaries after the retiree’s death. And companies are getting much less generous with defined benefit pensions.

401(k) payouts, after leaving a company or retiring, also tend to have terms that vary a lot from one company to the next.  At ING, it could be paid out only in 5 or 10 year schedules, or else be rolled over into an IRA.
I’ve wondered about another situation. I put in six years with a company in Dallas in the 1980s, one that has been bought and spun off twice since I left.  I would have been vested.  I wonder if I do have any rights. 

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