How do Pension Death Benefits Work?
Pensions can be confusing, even without the complication of a death. If someone has a pension, who does their pension go to after they die? If my dad died, can I get his retirement? Are there pension beneficiary rules? If any of these are questions you have, continue reading for more information on pensions after a death.
Who typically gets a pension after a death?
The pension beneficiaries after a death will be specified in the paperwork associated with the plan. Typically, it's up to the person with the pension to specify the beneficiary. If no beneficiary is assigned, the pension is then distributed according to what's stated in the plan or according to the state's rules. This typically means that the pension is distributed to the surviving spouse, children, parents, or other next of kin.
If you are interested in claiming your deceased parents' pension and are looking for information on a pension after the death of a father or a pension after the death of a mother -- it's worth looking into the pension paperwork. If your loved one assigned a beneficiary, that assigned beneficiary will receive the payout from the pension. If no beneficiary was assigned, it's time to filter through the pension paperwork or give the company a call to figure out who becomes the beneficiary. When chatting with the company, you'll need to ask what the process is to receive the pension beneficiary payouts and what kind of documentation you'll need to provide. Typically, companies will ask for some of the following documentation:
- Proof of your relationship to the decedent (often this is in the form of a birth certificate or a certified death certificate)
- A death certificate
- A copy of your government-issued ID
- The last 4 digits of the decedent's social security number
Are pension death benefits taxable?
Pension death benefits are not taxable. The money in the pension is already taxed, so when it is paid out as a death benefit, the beneficiary does not have to pay any additional taxes. The only time pension death benefits are taxable are when the payout amount exceeds the "value of the contract". This means that if the value of the payout exceeds the purchase price, the excess amount will be taxable. For more information on this, you should consult a tax professional.
Other benefits worth considering
If there is no pension available to you or you're looking for alternative sources that may provide benefits, it's worth going through this list and considering these alternatives:
- State disability benefits. Was the deceased receiving disability benefits from the state? If so, contact the state department or agency and notify them that the person is deceased. You can check to see if all payments were made up until the day of passing. Federal benefits. If the deceased was an employee of the federal government, there may be a pension or death benefits available for the family or a designated beneficiary. Get in touch with the employer to find out if there are any death benefits. Union benefits. If the deceased was part of a union, contact the union to find out if they offer death benefits or if there was a pension plan. Health insurance benefits. Some policies will offer coverage for funeral expenses, even if it's a health insurance plan. Contact the health insurance company that your loved one worked with and find out if there are any benefits you can apply for or receive. Lawsuits for a wrongful death. If the deceased passed away in an accident or if they were killed intentionally, you may qualify for survivor's benefits. In order to get a wrongful death benefit, you'll need to file a wrongful death lawsuit. Contact an attorney and find out what your options are in this scenario. Railroad Retirement Act benefits. Did the deceased work for a railroad that was covered by the Railroad Retirement Act? If so, you may be entitled to benefits. Contact the U.S. Railroad Retirement Board for more information. Veterans' Benefits. Was the deceased a veteran? If so, you are more than likely entitled to Veterans Benefits. The military will cover certain costs associated with funeral expenses for surviving members of the family. For more information, visit the VA's website. Social Security Death Benefit. Social Security provides a one-time lump sum of $255 to an eligible surviving family member after someone passes away. To learn more, read this article on Social Security Benefits.
In addition to the benefits listed above, it’s a good idea to start a memorial fundraiser for your loved one if you are looking for ways to handle funeral expenses and related costs. Memorial fundraisers on Ever Loved are free, easy to use, and quick to set up. You’ll also gain access to a post-death checklist that you can use to help you handle logistical tasks after someone passes away.