What Happens to Your Pension When You Die: Spouse and Tax Rules

When you die, your pension does not simply vanish, but what your family receives depends entirely on the type of plan and the choices you made before death. A traditional defined benefit pension pays monthly income that may continue to your spouse, shrink, or stop cold based on the payout option you elected. A 401(k), 403(b), or IRA passes its remaining balance to whoever you named as beneficiary. In both cases, federal law makes your spouse the default recipient unless the spouse signed a written waiver giving up that right.¹

Traditional Pensions: What Your Spouse Actually Gets

A defined benefit pension pays a monthly check for life, not a balance you can hand over. Whether that check keeps arriving after you die comes down to the payout option chosen — usually years before death and often irrevocable once payments begin.

The Joint and Survivor Annuity Default

Federal law requires covered pension plans to pay married participants as a joint and survivor annuity unless both spouses agree in writing to something else. You collect a monthly payment during your lifetime, and after you die, your surviving spouse continues receiving a percentage of that payment. The survivor share must be no less than 50% and no more than 100% of the joint-life amount.² Plans must also offer a qualified optional survivor annuity at either 75% or 50%, depending on the default.

The trade-off: a joint and survivor annuity pays less each month than a single-life annuity would. If a single-life benefit would have paid $2,000 per month, a joint and 50% survivor version might pay $1,600 while both spouses are alive and drop to $800 after the pensioner dies. Knowing your plan’s specific survivor percentage is essential for planning household expenses.

Single Life Annuity

A single life annuity pays a higher monthly amount, but payments stop completely when the pensioner dies. The surviving spouse receives nothing. A married participant can only elect this option if the spouse consents in writing, and that consent must be witnessed by a plan representative or a notary public.² The election generally cannot be reversed once payments start.

Dying Before You Retire

If you’re vested but die before reaching retirement age, the plan must provide a qualified pre-retirement survivor annuity to your surviving spouse.² Your spouse still receives monthly income even though you never began collecting. Some plans also include a period-certain guarantee that pays for a set number of years regardless of when death occurs; if the guarantee period has not expired, payments continue to the beneficiary until it does.

401(k), 403(b), and IRA Balances

Defined contribution accounts hold a cash balance that transfers to the named beneficiary at death. If the account is covered by federal retirement law and the account holder was married, the surviving spouse is automatically the beneficiary unless the spouse previously signed a written waiver.¹ The full remaining balance is available, which gives these accounts more flexibility than a pension check.

A surviving spouse has the broadest set of options. You can take a lump-sum distribution, roll the funds into an inherited IRA, or roll the account into your own IRA and treat it as though it were always yours.³ Rolling it into your own IRA lets you delay withdrawals until you reach the age when required minimum distributions begin, currently age 73, and resets the distribution rules as though you were the original owner.⁴

Non-spouse beneficiaries — children, siblings, friends, other individuals — inherit the balance but cannot roll it into their own IRA or treat the account as their own. They can take a lump sum at any time or move the funds into an inherited IRA, but their withdrawals are governed by the 10-year rule.³

The 10-Year Rule for Most Non-Spouse Beneficiaries

The SECURE Act of 2019 changed how long non-spouse beneficiaries can stretch out inherited retirement account withdrawals. Before 2020, a non-spouse beneficiary could spread distributions across their own life expectancy, sometimes over decades. Now most non-spouse beneficiaries must withdraw the entire account balance within 10 years of the account holder’s death.⁵

A narrow group of “eligible designated beneficiaries” is exempt and can still stretch distributions over their own life expectancy:

A surviving spouse, who can also roll the account into their own IRA or delay withdrawals until the deceased would have reached age 73.
A minor child of the account holder, who can stretch distributions until reaching the age of majority, at which point the 10-year clock begins.
A disabled or chronically ill individual.
Any person not more than 10 years younger than the deceased.

These categories apply to both employer-sponsored plans and IRAs.³

An important wrinkle: if the account holder died on or after the date they were required to start taking minimum distributions, beneficiaries subject to the 10-year rule must also take annual withdrawals during years one through nine. They cannot wait until year 10 to empty the account.⁶ If the account holder died before that required beginning date, the beneficiary has more flexibility to time withdrawals within the window, but the entire balance must still be gone by the end of year 10.

How Inherited Pension Money Is Taxed

Distributions from inherited retirement accounts funded with pre-tax contributions are fully taxable as ordinary income in the year you receive them. This applies to most 401(k)s, traditional IRAs, and defined benefit pensions. If the account holder made after-tax contributions, a portion of each distribution representing those contributions comes back tax-free.⁷

Inherited Roth IRAs and Roth 401(k)s work differently. Withdrawals of contributions are always tax-free. Withdrawals of earnings are also tax-free if the Roth account was open at least five years before the original owner’s death. If the account is less than five years old, earnings withdrawn may be taxed.³

The plan administrator reports distributions on Form 1099-R, using distribution code 4 to indicate a payment made because of the account holder’s death.⁸ Include any taxable amount in your gross income on your annual return.

Large estates may also owe federal estate tax. For 2026, the estate tax applies only when the total value of the deceased’s assets, including retirement accounts, exceeds $15,000,000.⁹ Most families fall below this threshold. Estate tax is separate from the income tax owed on withdrawals; in some cases, beneficiaries owe both.

Missing a required distribution is expensive. The IRS imposes a 25% excise tax on any shortfall, dropping to 10% if you correct the missed distribution within two years.⁵ Tracking deadlines under the 10-year rule can save thousands in avoidable penalties.

What Happens When No Beneficiary Is Named

If the account holder dies without a valid beneficiary designation on file, the plan’s governing documents decide who receives the funds. Most plans specify a default order: the surviving spouse first, then children in equal shares, then the estate. When funds pass through the estate rather than to a named beneficiary, they go through probate, which delays access for months and adds administrative costs.

The tax consequences are worse too. An estate is not a “designated beneficiary” under federal tax law, so the longer distribution periods, including the 10-year rule, do not apply. The entire account must generally be distributed within five years of the account holder’s death.⁶ Keeping your beneficiary designation current is one of the simplest ways to protect the people you leave behind.

Divorce and Former Spouses

Divorce introduces a competing claim on pension survivor benefits. A court can issue a qualified domestic relations order (QDRO) that assigns part or all of a pension’s survivor benefit to a former spouse.¹⁰ The QDRO can designate the former spouse as the “surviving spouse” for purposes of the joint and survivor annuity, meaning the former spouse — not a current spouse — would receive payments after the pensioner’s death.¹¹

A QDRO that divides the pension into separate interests calculates the former spouse’s share and survivor benefits independently. A shared-payment QDRO instead gives the former spouse a portion of each check during the pensioner’s lifetime, and can also assign the survivor annuity after death. A pensioner who remarries should review any existing QDRO carefully, because a former spouse’s rights under a valid order generally take priority. If no QDRO exists but a joint and survivor annuity naming the former spouse was elected before the divorce, the former spouse may retain those survivor rights unless the plan documents and a new spousal waiver provide otherwise.

If the Pension Plan Itself Fails

If a private-sector defined benefit plan runs out of money or the sponsoring company goes bankrupt, the Pension Benefit Guaranty Corporation steps in and continues paying benefits up to a guaranteed maximum. For 2026, the maximum monthly guarantee for a single-employer plan is $7,789.77 for someone starting benefits at age 65 under a straight-life annuity, or $7,010.79 under a joint and 50% survivor annuity.¹² The guarantee is lower if benefits start before age 65.

Survivor annuities are covered too. If the pensioner elected a joint and survivor annuity before the plan failed, the surviving spouse’s portion is protected up to the same caps. Multiemployer plans, often union-sponsored, have a separate and significantly lower PBGC guarantee. The PBGC does not cover government pensions, church plans, or plans for professional-service employers with fewer than 26 employees. Federal employees are covered by the Federal Employees Retirement System, which has its own survivor benefit structure.¹³

How to File a Death Benefit Claim

Before any funds are released, you’ll need to gather several documents. Request multiple certified copies of the death certificate from the local vital records office; fees vary by jurisdiction but typically range from $5 to $34 per copy. You’ll also need the deceased’s Social Security number and any account identification numbers, which appear on recent benefit statements or pay stubs.

The plan administrator, usually reached through the employer’s human resources department, will provide an official beneficiary claim form. It typically asks for:

Your full legal name, date of birth, and Social Security or tax identification number.
Your payment preference — lump sum, rollover, or annuity payments — and bank account details for direct deposit.
Federal and state income tax withholding elections.
Full trust documentation if a trust is named as beneficiary.

Once you submit a complete claim, the plan administrator has up to 90 days to review it and make a decision. If special circumstances require more time, the administrator can extend the deadline by an additional 90 days but must notify you in writing before the initial period expires.¹⁴ If your claim is denied, the administrator must explain the reason in writing and describe how to appeal.

Send documents by registered mail with a return receipt for proof of delivery, or save the confirmation page from any online submission. That timestamp marks the official start of the processing period. Watch your mail and email for requests for additional information; delays in responding push the timeline further out. Once the review is complete, funds are typically disbursed by direct deposit or mailed check.

1
U.S. Department of Labor. FAQs About Retirement Plans and ERISA
2
Office of the Law Revision Counsel. 29 USC 1055 – Requirement of Joint and Survivor Annuity and Preretirement Survivor Annuity
3
Internal Revenue Service. Retirement Topics – Beneficiary
4
Internal Revenue Service. Retirement Topics – Required Minimum Distributions
5
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
6
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
7
Internal Revenue Service. Topic No. 410, Pensions and Annuities
8
Internal Revenue Service. Instructions for Forms 1099-R and 5498
9
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
10
Office of the Law Revision Counsel. 29 USC 1056 – Form and Payment of Benefits
11
Pension Benefit Guaranty Corporation. Qualified Domestic Relations Orders and PBGC
12
Pension Benefit Guaranty Corporation. Maximum Monthly Guarantee Tables
13
eCFR. 5 CFR Part 843 – Federal Employees Retirement System Death Benefits and Employee Refunds
14
eCFR. 29 CFR 2560.503-1 – Claims Procedure