Distribution of benefits upon death
If you have a Pre-1988 Benefit and you die before you have begun receiving your benefits, the amount in your accounts will be distributed to your designated beneficiary under one of the following methods: die before you have begun receiving your benefits, the amount in your accounts will be distributed to your designated beneficiary under one of the following methods:
- Annuity. If you are married, under the first method of payment the Trustee will use the amount in your accounts to purchase (from an insurance company) a preretirement survivor annuity for your surviving spouse. The annuity will pay a monthly benefit to your spouse until his or her death. The amount of the monthly benefit paid under the annuity will depend on market conditions for annuity contracts at the time the annuity contract is purchased. This form of death benefit is automatic unless you and your spouse waive it.
- Waiver of annuity form. You may waive the annuity form of death benefit any time after the beginning of the Plan Year in which you reach age 35. In order for your waiver to be valid, it must also be signed by your spouse. Your spouse's signature must be witnessed by a Plan representative or by a notary public. You may revoke this waiver at any time.
- In addition, your spouse may waive the annuity form of death benefit after your death. In that case, your spouse would receive the amount in your accounts in the form elected in writing by your spouse from the optional methods of payment described above.
If you and your spouse waive the annuity form of death benefit, or if you are not married at the time of your death, the beneficiary you have named will receive the type of death benefit described in "Payments to beneficiary." You may appoint one or more beneficiaries by completing and submitting a beneficiary designation form online via the Vanguard website. You may change your beneficiary at any time before your death by completing and submitting a new beneficiary designation online via the Vanguard website. If you have not named a beneficiary or your beneficiary predeceases you, payment will be made to your surviving spouse, if any, and otherwise in equal shares to your children or their then living issue by right of representation. If you have not named a beneficiary or your beneficiary predeceases you, and you have neither a surviving spouse nor children (or their living issue) at the time of your death, payment will be made to your estate.
If you designate your spouse as your beneficiary and later become divorced, that designation will no longer be valid.
Under the alternative method of payment, the Trustee will pay the amount in your accounts to the beneficiary you have named if either:
- You have no surviving spouse; or
- You have a Pre-1988 Benefit and you and your spouse waive the annuity form of death benefit.
The distribution will be made in the form (lump sum, installments, etc.) that you elected in writing before your death. If you made no written election, the form of distribution will be elected by your beneficiary in writing from the optional methods of payment described above.
If you die before you have begun receiving your benefits, the Trustee will pay your vested account balance to your beneficiary in the form (lump sum, installments, or a combination) that you elected in writing before your death. If you made no written election, the form of distribution will be elected by your beneficiary in writing from the optional methods of payment described above.
Payments to your surviving spouse are required to begin by December 31 of the year following the year of your death or by December 31 of the year in which you would have attained age 72 (or age 73 if you were born after December 31, 1950), if later. Payments to an "eligible" designated beneficiary other than your spouse are required to begin by December 31 of the year following the year of your death unless you or your beneficiary elects by December 31 of the year following the year of your death to apply the "ten-year rule." If the ten-year rule is elected, your entire vested account balance must be distributed no later than December 31 of the year containing the tenth anniversary of your death. An "eligible" designated beneficiary is generally your spouse, your child under age 21, a disabled or chronically ill individual, or any other individual who is not more than 10 years younger than you. Generally, payments to a designated beneficiary who is not an "eligible" designated beneficiary must be completed no later than the end of the calendar year that includes the tenth anniversary of your death.
If you die while receiving your benefits in the form of installment payments, payments will continue to your beneficiary according to the same schedule of installment payments until the amount in your accounts has been completely distributed. Your beneficiary may instead choose to receive the remaining benefits in a lump sum payment.