Hello,

My sister's ex-husband passed away recently and she found out she was named as his beneficiary for his 401k. They were divorced 5 years ago. From what I know the IRS has a lien against him, and he also owes different credit companies money. I don't know who she has worked with yet, but she has been told (or is under the assumption) that she can't do any type of roll-over (into her 401k which is a separate employer) or an IRA and that she will get a lump sum payment, which will be taxed as income, and this can not be touched by the IRS because it is in a 401k account (again, he apparently owes money to them). There is also an outstanding loan from the 401k. The amount in the 401k is ~$50,000. I don't know if that is with or without paying off the loan (I don't know what the loan amount is). I know there are a lot of variables here, but can anybody comment on what will happen to the 401k money, and what options my sister has for options with how to handle this?

Paul