Yes and No. Your 401(k) is known as a qualified asset so technically, those funds are not included within a typical decedent’s estate, i.e. they do not pass through the operation of a probate estate. Funds within a decedent’s 401(k) are distributed upon death pursuant to the participant’s “beneficiary designation”, outside the operation of the estate. An exception to this procedure sometimes arises when a decedent either names their own estate as the beneficiary or neglects to designate a beneficiary.
There are special IRS rules and regulations governing post-death distributions to designated beneficiaries, so care must be taken when considering the disposition of such funds. Consulting a professional is a must. Contact an attorney, financial planner or CPA.
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