Introduction

This HR-facing checklist outlines what U.S. employers must do when an employee dies. It focuses on four core workstreams: group life insurance, final wages, 401(k)/retirement benefits, and COBRA notices. It includes ERISA/IRS timelines, model scripts, and a link to Sunset’s free claim support for families.

Immediate steps (Day 0–3)

• Confirm the death (obituary, family confirmation, or death certificate) and update HRIS/payroll status.

• Identify next of kin and any on-file beneficiaries (life insurance, retirement plan) and gather the plan’s Summary Plan Description (SPD) and certificates/booklets.

• Open a single case record to track dates, notices, documents furnished, and who you contacted.

Group life insurance (ERISA welfare plan)

1) Locate plan documents

• Retrieve the SPD and certificate/policy. Participants/beneficiaries are entitled to plan documents upon written request within 30 days; failure can trigger penalties. See DOL’s Reporting and Disclosure Guide and disclosure rule. DOL Reporting and Disclosure Guide • 29 CFR 2520.104b-1

2) Start the claim

• Provide insurer claim forms, the SPD’s claims procedure, and acceptable proof of death. ERISA claims rules require a decision within a reasonable period not to exceed 90 days (one 90‑day extension with written notice). Appeals must be allowed (generally decision within 60 days, with one 60‑day extension if needed). 29 CFR 2560.503-1

3) Beneficiary issues to watch

• Conflicts between the beneficiary form and the will are resolved by the plan documents/beneficiary designation. If no form exists, default rules in the plan govern.

• Pay-on-Death/Transfer-on-Death designations outside the plan can create inequities or debt‑payment gaps; ensure executors understand these pitfalls. ACTEC on POD/TOD

4) Scripts (copy/paste)

• To beneficiary: “We’re sorry for your loss. Enclosed are the group life claim form, a copy of the SPD section on claims and appeals, and a checklist of documents (including death certificate). The insurer must make a determination within ERISA’s timelines. Please contact us with any questions.”

• To insurer/TPA: “Please accept this notice of a life insurance claim for [Name, SSN last4]. Attached are the death certificate and beneficiary form. The plan’s ERISA claims procedure applies; kindly confirm receipt and expected decision date.”

Final wages and tax reporting

1) Pay any wages owed (regular, accrued vacation per policy, expense reimbursements). Note that payment timing and escheatment rules can vary by state; coordinate with counsel/payroll.

2) Report and withhold correctly (IRS)

• If paid in the same calendar year as death: withhold Social Security and Medicare; report these amounts only in Boxes 3 and 5 of Form W‑2 (and related FICA in Boxes 4 and 6). Also report the gross amount to the estate/beneficiary on Form 1099‑MISC, Box 3. Do not include the post‑death amount in W‑2 Box 1.

• If paid after the year of death: do not withhold FICA; do not report on W‑2; report the payment on Form 1099‑MISC, Box 3, to the estate/beneficiary. IRS W‑2/W‑3 Instructions (2025)

401(k) and other retirement benefits

1) Notify the recordkeeper/administrator and retrieve the plan SPD and beneficiary designation.

2) Spousal and beneficiary rights

• Many 401(k) plans default to the spouse as beneficiary unless the spouse consented to a different designation; confirm plan terms. Spousal consent rules arise under IRC 401(a)(11)/417 and related regulations; ensure any required consents are on file. IRS: Fixing Failure to Obtain Spousal Consent • IRS 401(k) Distribution Rules

3) Distribution and RMD framework (for beneficiaries’ awareness)

• SECURE Act rules generally require most non‑spouse beneficiaries to fully distribute inherited defined contribution accounts within 10 years; “eligible designated beneficiaries” (e.g., surviving spouse, minor child of the decedent, disabled/chronically ill, or a beneficiary ≤10 years younger) have additional options. HR should provide plan contacts and the SPD, and recommend beneficiaries consult tax advisors. IRS Pub. 590‑B (RMDs and beneficiaries)

4) Script (to beneficiary)

• “We’ve notified the plan recordkeeper for [Plan Name]. Enclosed are the SPD sections on death benefits and claims. They will guide you through beneficiary options and required tax notices. For independent help locating other accounts, see Sunset below.”

COBRA after an employee’s death (group health plan)

1) Treat death as a qualifying event

• Employer must notify the plan administrator within 30 days of the employee’s death. The plan administrator must send the COBRA election notice within 14 days after receiving that notice (combined 44‑day period if employer is also the administrator). DOL Employee COBRA Guide • CMS/DOL COBRA Q&A

2) Coverage length and cost

• Spouse/dependents losing coverage due to the employee’s death generally may elect up to 36 months of continuation coverage. Premiums can be up to 102% of the applicable premium. CMS COBRA Fact Sheet • NY DFS COBRA FAQ (cost example)

3) Script (to surviving dependents)

• “You will receive a COBRA election notice by mail. It explains your right to continue coverage (generally up to 36 months) and the cost (up to 102% of premium). If you do not receive the notice within 44 days of the loss of coverage, please contact us.”

Required documents you may need to furnish

• SPD and any plan documents “under which the plan is established or operated,” the most recent Form 5500/SAR (if applicable), and the plan’s claims and appeals procedure, upon written request within 30 days. DOL Plan Information • DOL Reporting and Disclosure Guide

2025 penalty reminders (plan administrators)

• Failure to furnish plan documents to the DOL upon request: up to $195/day (cap $1,956/request) for penalties assessed after Jan 15, 2025; participant document‑request penalties under ERISA §502(c)(1) continue to be up to $110/day for failure after the 30‑day furnishing window. Mercer: 2025 DOL penalties • TASC summary incl. $110/day note

One-page reference table

Sunset: free claim support you can share with families

• Life insurance and employer-plan claims: Families can use Sunset’s free software to locate and claim group or individual life policies, including employer-provided coverage. Sunset life‑insurance claim support

• Retirement accounts and other assets: Sunset helps locate and claim 401(k)s/IRAs and other accounts; it’s free to families (funded by partner banks). Most families identify accounts quickly, and Sunset provides FDIC‑insured estate accounts for consolidations. Retirement account search • How Sunset works

Security, trust, and cost notes you can share:

• Sunset is 100% free to families; revenue comes from interest paid by banking partners while funds are in estate accounts. Sunset is SOC 2 Type II certified and operates nationwide with probate document generation across all 50 states and 3,000+ counties. How it Works

Model messages and templates

1) SPD/document request acknowledgment (to beneficiary)

• “We received your written request dated [MM/DD/YYYY] for [SPD/plan documents]. Copies are enclosed and/or available at [secure link]. Under ERISA, you have the right to these materials and to the plan’s claims and appeals procedure.”

2) COBRA event notice (internal to plan admin/TPA)

• “Qualifying event: death of employee [Name, SSN last4]; event date [MM/DD/YYYY]; coverage loss date [MM/DD/YYYY]. Please issue COBRA election notices to qualified beneficiaries within the regulatory timeframe.”

3) Final wages memo (internal to payroll)

• “Employee deceased on [MM/DD/YYYY]. Pay any wages due to the estate/beneficiary. If payment occurs in [same year], withhold FICA and report on W‑2 Boxes 3/5 and 1099‑MISC Box 3 to the estate. If in [next year], issue only 1099‑MISC Box 3; no FICA withholding.” IRS W‑2/W‑3 Instructions

4) Life insurance claim cover letter (to beneficiary)

• “Enclosed are the claim form, the plan’s claims/appeals procedure, and contact details for the insurer. We will assist with submission and tracking. If an adverse decision is issued, you have appeal rights per ERISA.”

Practical compliance tips

• Date-stamp every outgoing notice and keep copies.

• Use plain-language cover letters and include claims/appeals rights with every adverse decision you forward.

• If you are both employer and plan administrator for health plans, calendar the 44‑day maximum to mail COBRA election notices after loss of coverage.

• For retirement plans, never provide tax advice; instead, provide contacts, the SPD, and IRS resources.

• When documents are requested, fulfill within 30 days and log delivery method to mitigate penalties.