A participant in a 401(k) plan died. She was unmarried and the death benefit is less than $5,000. She named a non profit hospital as her beneficiary. Do we need to send a distribution election form to the non profit or just send the non profit her vested benefit without first sending an election form? Since the distribution is going to a non profit there would be no withholding, since there is no taxation on the non profit, correct?

If someone has an answer, could they please provide the source of the answer.

Thank you very much

Dan

The beneficary should be paid in accordance with plan procedures. Under IRC 3405 the distribution is subject to voluntary 10% withholding which the hospital will opt out of.