What Does an Employer Do When an Employee Dies? (w/Examples) + FAQs

When an employee dies, the employer must stop payroll as of the date of death, pay final wages to the legal beneficiary or estate under state law, report post-death wages correctly to the IRS, notify benefit plan administrators, offer COBRA to covered dependents, and comply with OSHA if the death was work-related. This duty arises from a web of federal rules, including the Fair Labor Standards Act for unpaid wages, ERISA §1055 for retirement plan beneficiaries, IRS Revenue Ruling 86-109 for wage reporting, 29 C.F.R. §1904.39 for fatality reporting, and state “payment to successor” statutes. The immediate negative consequence of a mistake is personal liability for the employer, double payment of wages, IRS penalties under IRC §6721, and potential ERISA fiduciary suits that a plaintiff’s firm like Schlichter Bogard would happily pursue.

According to the Bureau of Labor Statistics Census of Fatal Occupational Injuries, 5,283 U.S. workers died on the job in the most recently reported year, and the CDC reports that roughly 1 in 4 deaths each year occurs among people of working age, meaning almost every mid-size employer will face this event.

• 💼 How to close out final pay, PTO, and bonuses under federal and state wage law
• 🧾 How to report post-death wages on Form W-2 and Form 1099-MISC the way the IRS requires
• 🏥 How to run COBRA, life insurance claims, and 401(k) distributions without breaching ERISA
• 🚨 How to meet the 8-hour OSHA fatality reporting rule when death happens on the job
• ⚖️ How to avoid the 7 most common mistakes that trigger lawsuits, penalties, and family complaints

The Legal Framework That Kicks In the Moment an Employee Dies

The death of an employee triggers at least six different legal systems at once, and the employer must act in all of them within days. The governing authorities include federal wage law under the FLSA, federal retirement and welfare plan law under ERISA, federal tax reporting under the Internal Revenue Code, federal workplace safety reporting under the OSH Act, state wage payment statutes, and state probate codes that tell the employer who may legally receive the last paycheck. Each system has its own deadline, its own form, and its own penalty for missing the deadline.

The plain-English idea is simple. The worker’s legal rights do not vanish at death. They transfer to a spouse, a named beneficiary, or an estate, and the employer must hand money and information to the right person in the right way.

The consequence of ignoring any one of these systems is steep. An employer that pays a final check to the wrong person can be forced to pay it again to the correct estate, as the court held in In re Estate of Jackson and dozens of similar state probate cases. Missing the OSHA 8-hour fatality window can cost up to $16,131 per violation under the OSHA penalty schedule. Reporting wages on the wrong form can bring IRS penalties of $310 per form under IRC §6721.

A common misconception is that HR can just “freeze the account” and wait for the family to ask questions. That is wrong. The employer has affirmative duties, and several deadlines run from the date of death, not the date the family calls.

Federal Statutes and Regulations at a Glance

The FLSA requires payment of all earned wages, even after death, because unpaid wages are considered property of the worker that passes to the estate. The Consolidated Omnibus Budget Reconciliation Act gives a surviving spouse and dependent children the right to continue group health coverage for up to 36 months. ERISA §1055 forces retirement plans to pay a qualified pre-retirement survivor annuity to a surviving spouse unless the spouse signed a notarized waiver.

The Supreme Court in Egelhoff v. Egelhoff, 532 U.S. 141 (2001) held that the ERISA beneficiary form trumps state divorce decrees, so the employer must pay whoever is on the plan document, not whoever the family thinks should get the money. Getting that one rule wrong is the single biggest source of post-death ERISA litigation.

State Law Layers on Top

Every state has a wage payment statute that sets the deadline for the last paycheck, and most states also have a “small estate” rule that lets the employer pay a surviving spouse or adult child directly without probate if the amount is below a cap. California Probate Code §13600 lets employers release up to $18,450 to a surviving spouse on a sworn affidavit. Texas Estates Code §453.004 allows direct payment to a surviving spouse and minor children. New York EPTL §5-3.1 permits up to $92,000 in exempt property and wages to pass to the spouse.

A common mistake is treating every state the same. A payroll team that uses a California process for a Texas death will delay the family’s access to cash, and the family will complain to the state wage board.

Step-by-Step Process From Notification to Final W-2

The timeline below shows what HR, payroll, benefits, and legal should do in the first 72 hours, the first 30 days, and the first calendar year. Each step maps to a specific rule and a specific consequence for ignoring it.

First 24 to 72 Hours

The employer should confirm the death in writing, usually through a death certificate or a signed statement from a funeral home, before any money moves. Without a confirmed death certificate, a bad actor can pose as a relative and steal the final check, a scam the FTC calls “ghosting fraud.”

Next, HR must notify the payroll provider to stop all future pay runs, direct deposits, and scheduled bonuses. A missed stop-pay order creates an overpayment that the employer must claw back from the deceased’s bank account, and banks are generally required to reverse direct deposits posted after the date of death under NACHA Operating Rules. The consequence of a late stop-pay is a painful letter to the grieving family asking for the money back.

If the death happened at work or was caused by a work event, the employer must call OSHA within 8 hours at 1-800-321-OSHA. Missing that 8-hour window is a per se violation under 29 C.F.R. §1904.39, and OSHA almost always opens an inspection.

HR should also lock the employee’s network access, email, and building badges, but preserve the mailbox and files because they may be needed for a workers’ compensation claim or a wrongful death lawsuit. Destroying records after notice of a potential claim can trigger a spoliation sanction under Federal Rule of Civil Procedure 37(e).

A common misconception is that HR should immediately call the whole company. The better practice is to speak with the family first, ask what they want shared, and then send a short, factual message to coworkers.

Day 3 Through Day 30

During this window, payroll calculates the final check, including unused PTO in states that treat it as a wage, such as California under Suastez v. Plastic Dress-Up, 31 Cal.3d 774 (1982). In states like Georgia and Florida, unused PTO is payable only if the handbook says so, which is why the handbook language matters.

HR must also send the COBRA election notice to the surviving spouse and dependent children within 44 days of the death. The election gives the family up to 36 months of continuation coverage, which is longer than the 18 months available for other qualifying events. A late COBRA notice can bring a $110 per day penalty under ERISA §502(c).

The benefits team contacts the group life insurance carrier to start the claim, and sends beneficiary forms for the 401(k), pension, HSA, and any deferred compensation plan. ERISA requires the plan administrator to pay the named beneficiary, even if the family thinks someone else should get the money, as the Supreme Court confirmed in Kennedy v. DuPont, 555 U.S. 285 (2009).

A common mistake is paying the surviving spouse from a 401(k) without checking whether the spouse was properly named. If an ex-spouse is still on the form, the plan must pay the ex-spouse, and the new spouse’s only remedy is a constructive trust lawsuit.

Day 31 Through Year-End

Payroll issues the final wage check to the estate or the statutory successor. If the check is issued in the same calendar year as the death, the wages go on Form W-2 in Boxes 3, 4, 5, and 6 for Social Security and Medicare, but not in Box 1 for federal income tax, under IRS Revenue Ruling 86-109. The same gross amount also goes on a Form 1099-MISC in Box 3 issued to the estate or beneficiary.

If the check is issued in a later calendar year, the wages are not reported on a W-2 at all, only on a 1099-MISC to the recipient. Reporting the same dollars on both forms in Box 1 and Box 3 is a frequent double-reporting error that triggers IRS notices.

Final Wages, PTO, and Bonuses Under State Law

Every state tells the employer who may legally receive the last paycheck. The rules fall into three buckets: pay to surviving spouse on affidavit, pay to the estate, or pay to a statutory successor list.

The plain-English idea is that most states let the employer skip probate court for small paychecks, which saves the family weeks of delay. The consequence of skipping the affidavit step and paying the “wrong” relative is that the employer can be sued by the rightful heir and forced to pay again.

A named example helps. Consider Maria Alvarez, a $75,000 salaried engineer in San Diego who dies with 120 hours of unused PTO. Her gross final pay is roughly $4,327 in wages plus $4,327 in PTO, for a total of about $8,654. Because California treats PTO as a wage under Labor Code §227.3, the employer must pay all of it, and because the total is under $18,450, the employer may pay Maria’s husband on a Probate Code §13601 affidavit.

Unused PTO, Vacation, and Sick Leave

California, Colorado, Illinois, Massachusetts, Montana, Nebraska, and several other states treat accrued vacation as earned wages that must be paid out at death. Texas, Florida, Georgia, and most southern states leave the question to the employer’s written policy. The Colorado Wage Protection Act was strengthened in 2021 to make “use it or lose it” policies unenforceable, after the state supreme court ruled in Nieto v. Clark’s Market.

The consequence of withholding PTO in a state that treats it as a wage is a wage theft claim, plus liquidated damages and attorney’s fees. In Illinois, the new wage theft criminal statute can even bring misdemeanor charges against a payroll manager who knowingly underpays.

A common mistake is assuming sick leave is never payable. In states like Maine under the earned paid leave law, accrued paid leave is payable at separation, including separation by death, if the employer has more than 10 employees.

Bonuses, Commissions, and Deferred Pay

Earned bonuses and closed commissions are wages and must be paid to the estate, even if the employee was not “employed on the payout date,” because courts generally hold that the death is not a voluntary resignation. The leading case is Schwartz v. Sun Co., 276 F.3d 900 (7th Cir. 2002), which held that a “must be employed” clause does not bar recovery when the employee dies before payout.

Deferred compensation under a 409A plan typically accelerates on death, and the employer must pay the balance within the window set in the plan document. Missing the window can create a 20% additional tax on the beneficiary under IRC §409A(a)(1)(B).

A named example: James Okafor, a sales director earning $75,000 base plus a $40,000 annual bonus for closed deals, dies on November 15. His closed commissions as of that date total $32,000. The employer must pay the $32,000 to James’s estate because the commissions were already earned, and withholding them would expose the company to a wage claim under the state commission statute.

Tax Reporting: W-2 vs. 1099-MISC After Death

The IRS rule under Revenue Ruling 86-109 and Publication 15 (Circular E) is short but trips up almost every payroll team. Wages paid in the same calendar year as the death are subject to FICA and FUTA, but not federal income tax withholding. The gross amount goes on the W-2 in Boxes 3 and 5, but not Box 1. The same gross amount also goes on a 1099-MISC in Box 3 to the estate.

The plain-English idea is that the IRS wants to tax the money once, at the estate level, not twice. The consequence of putting the wages in Box 1 of the W-2 and also on a 1099-MISC is a CP2000 notice to the estate for double income, which the executor must then fight.

Same-Year Payment Example

If Maria Alvarez earned $8,654 in final wages paid in the same year as her death, the employer withholds Social Security at 6.2%, or about $536.55, and Medicare at 1.45%, or about $125.48. The employer does not withhold federal income tax. The W-2 shows $8,654 in Box 3 and Box 5, but $0 in Box 1. A 1099-MISC issued to the estate shows $8,654 in Box 3.

The estate reports the $8,654 as income in respect of a decedent under IRC §691, and the estate gets a deduction for the estate tax attributable to that income, if any estate tax was paid.

A common misconception is that the employer should withhold federal income tax “to help the family.” That is wrong. Extra withholding creates a refund due to the estate, which delays the family’s access to cash and forces the executor to file a Form 1041 refund claim.

Later-Year Payment

If the final check is paid in the calendar year after the death, no W-2 at all is issued for that check, and no FICA is withheld, under Rev. Rul. 86-109. Only a 1099-MISC to the recipient is issued. This is the single most missed rule in payroll.

The consequence of issuing a late W-2 for a following-year payment is an over-remittance of FICA that must be recovered on Form 941-X, a process that takes months.

State Income Tax Withholding

Most states follow the federal rule and do not require state income tax withholding on post-death wages. A few, including Pennsylvania, treat the payment as non-wage compensation for state purposes, so the employer should check the state revenue department’s guidance, such as Pennsylvania REV-1667.

Benefits: Health, Life, Retirement, and COBRA

Benefits administration is where the biggest dollars move and where the biggest fiduciary risks live. The key rules sit in ERISA, the Internal Revenue Code, and the plan documents themselves.

COBRA for the Surviving Family

Death of the covered employee is a qualifying event under COBRA §4980B that gives the surviving spouse and dependent children up to 36 months of continued coverage. The employer or plan administrator must send the COBRA election notice within 44 days of the death.

The consequence of a late notice is the statutory penalty of up to $110 per day per beneficiary under ERISA §502(c)(1), plus attorney’s fees. Courts award the penalty in cases like Gaines v. Amalgamated Insurance where the plan sent the notice weeks late.

A common mistake is sending the notice only to the last known address of the employee. The correct practice is to mail it to each qualified beneficiary’s address, which may be different if the spouse has moved in with family.

Group Life Insurance

Group term life insurance up to $50,000 is tax-free to the employee under IRC §79, and the death benefit is paid to the beneficiary on the life insurance beneficiary form, which is often separate from the 401(k) form. The employer’s duty is to submit a death claim with a certified death certificate to the carrier, typically within 30 days.

A named example: David Chen, a $75,000 salaried analyst, carried a $150,000 group life policy through his employer, with his sister named as beneficiary before his marriage. David married Priya last year but never updated the form. Under Kennedy v. DuPont, the carrier must pay the sister, not Priya, and the employer cannot override the form.

401(k) and Pension Plans

ERISA §1055 requires a qualified pre-retirement survivor annuity for the surviving spouse of a married participant, unless the spouse signed a notarized waiver. If the employee was married and died before taking distributions, at least 50% of the account generally goes to the spouse by law, regardless of the beneficiary form, for defined benefit plans. For 401(k) plans, the full account goes to the spouse unless the spouse waived that right.

The plan administrator must also offer the beneficiary the option of a lump sum, a five-year payout, or a life expectancy payout under the post-SECURE Act rules. A non-spouse beneficiary who is not an “eligible designated beneficiary” must generally empty the account within 10 years.

A common misconception is that the employer can just hand the 401(k) balance to whoever shows up with the death certificate. That will trigger an ERISA fiduciary suit under 29 U.S.C. §1132 and personal liability for the plan administrator.

HSA and FSA Accounts

A Health Savings Account becomes the property of the named beneficiary on death. If the beneficiary is the spouse, the HSA continues as the spouse’s HSA. If the beneficiary is anyone else, the account is liquidated and the fair market value is taxable income to the beneficiary.

A Flexible Spending Account under IRS Notice 2013-71 generally allows the family to submit claims for expenses incurred before the date of death, but not after. The employer should extend the run-out period and communicate it clearly to the family.

OSHA, Workers’ Comp, and On-the-Job Deaths

If the death was caused by a work event, a whole new set of duties applies on top of payroll and benefits. The OSHA fatality reporting rule requires the employer to report the death by phone or online within 8 hours.

The 8-Hour OSHA Reporting Rule

The employer calls 1-800-321-OSHA or uses the OSHA online reporting form. The report must include the employer’s name, time and location of the event, a brief description, and a contact person. OSHA will almost always open an inspection, which can lead to citations, penalties, and abatement orders.

The consequence of a late report is a citation under 29 C.F.R. §1904.39, with a proposed penalty up to $16,131 per violation, and higher for willful or repeat conduct under the OSHA penalty structure.

A named example: Carlos Ramirez, a construction foreman earning $75,000 on a commercial site in Houston, falls from scaffolding at 7 a.m. and is pronounced dead at 8:15 a.m. The employer must call OSHA by 4:15 p.m. the same day. Waiting until the next morning, even to “get the facts,” is a per se violation.

State Workers’ Compensation Death Benefits

Every state provides death benefits to the surviving spouse and dependent children when death arises out of and in the course of employment. California pays up to $320,000 for two or more total dependents, plus up to $10,000 in burial expenses. Texas pays 75% of the worker’s average weekly wage to the surviving spouse for life or until remarriage. New York pays two-thirds of the average weekly wage to the spouse for life.

The exclusive remedy rule under most state workers’ compensation acts bars the family from suing the employer in tort for a work-related death, except where an intentional tort exception applies. Blankenship v. Cincinnati Milacron is the leading intentional-tort case.

Third-Party Wrongful Death Claims

Even though the workers’ compensation system is exclusive as against the employer, the family can still sue third parties, such as equipment manufacturers or subcontractors. The employer’s workers’ compensation carrier typically has a subrogation lien against the third-party recovery under the state statute.

A common mistake is telling the family “you can’t sue anybody.” That is wrong, and it can be twisted into a claim of intentional misrepresentation by plaintiff’s counsel.

Communicating With the Family and Coworkers

The legal steps sit inside a human event, and how the employer speaks to the family shapes whether the next six months bring a lawsuit or a thank-you card. The Society for Human Resource Management publishes guidance that many HR teams follow.

Contacting the Family

A senior manager, not an HR generalist, should call the primary emergency contact within the first 24 hours to express condolences and offer help. The call should cover the name of a single HR contact, the timeline for the final paycheck, a commitment to walk the family through benefits, and an offer to collect personal items from the workspace.

The consequence of a cold or delayed call is a family that feels disrespected, which is the single strongest predictor of a later lawsuit, according to plaintiff-side studies summarized by the ABA.

Telling Coworkers

After the family consents, the employer sends a short, factual message to the team, usually from the CEO or the direct manager. The message avoids the cause of death unless the family asks that it be shared. The employer offers the Employee Assistance Program for counseling.

A common misconception is that the employer should hold a company-wide meeting right away. The better practice is a small team meeting first, then a broader note, then a memorial event later if the family wants one.

Bereavement Leave for Coworkers

Five states now require paid bereavement leave, including Oregon, Illinois, California under AB 1949, Maryland, and Washington. The employer must update the handbook and payroll codes to track bereavement properly. The FMLA does not directly cover grief, but it may cover a serious health condition that results from grief, such as depression requiring inpatient care.

Mistakes to Avoid

• Paying the final check to the person who “seems closest” instead of the statutory successor, which can force the employer to pay twice under state probate law.
• Missing the OSHA 8-hour fatality reporting window, which is a per se violation carrying penalties up to $16,131.
• Withholding federal income tax on post-death wages, which violates Rev. Rul. 86-109 and delays the family’s cash.
• Sending the COBRA notice late, which exposes the employer to $110 per day penalties under ERISA §502(c).
• Paying 401(k) balances based on “what the family says” rather than the plan’s named beneficiary, a direct violation of Kennedy v. DuPont.
• Treating unused PTO as forfeited in states like California where it is a vested wage.
• Destroying the deceased’s emails and files before a potential wrongful death or workers’ compensation claim resolves, triggering spoliation sanctions under FRCP 37(e).
• Ignoring 409A deferred compensation rules, which can stick the beneficiary with a 20% additional tax.
• Failing to reverse direct deposits posted after the date of death under the NACHA Operating Rules, leaving the employer to chase funds.
• Sharing the cause of death with coworkers without family consent, which can support an invasion of privacy or HIPAA complaint if medical information was involved.

Do’s and Don’ts for HR and Payroll

Do’s:

• Do confirm the death with a certified death certificate before releasing any money, because banks and probate courts require it for every downstream step.
• Do assign one HR point of contact to the family so the family has a consistent voice, which reduces confusion and lawsuit risk.
• Do calendar every deadline, including the OSHA 8-hour call, the 44-day COBRA notice, and the plan’s beneficiary election deadlines, because each one carries its own penalty.
• Do consult state probate rules before cutting the final check, because the right payee varies by state and by dollar amount.
• Do document every decision, every call, and every notice in a single file, because ERISA fiduciary litigation turns on the paper record.

Don’ts:

• Don’t let the direct deposit run after the date of death, because the bank will reverse it and the employer will have to chase the money.
• Don’t rely on a handwritten note or text from a relative instead of the plan’s beneficiary form, because Egelhoff says the form controls.
• Don’t share medical or mental health details with coworkers without family consent, because it can trigger HIPAA or state privacy claims.
• Don’t promise the family a number before payroll has actually run the final calculation, because an incorrect promise becomes a wage dispute.
• Don’t forget to issue both the W-2 and the 1099-MISC the same year as the death, because the IRS matching system expects both forms for the same dollars under Rev. Rul. 86-109.

Pros and Cons of Handling Death In-House vs. Through an Administrator

Pros of in-house handling:

• Faster response to the family, because HR already knows the employee and the plan.
• Lower direct cost, because outside administrators charge per-event fees that can reach $2,500.
• Better coworker communication, because the message comes from people the team already trusts.
• Tighter control of the narrative, which reduces the risk of rumors spreading on Slack or LinkedIn.
• More flexibility to offer non-standard help, such as extending the FSA run-out or waiving a signing bonus clawback.

Cons of in-house handling:

• Higher risk of missing a technical deadline, such as the 44-day COBRA notice, which the outside administrator tracks automatically.
• Emotional strain on HR staff, who may not be trained to handle bereavement conversations.
• Bigger litigation exposure, because the employer is both the plan sponsor and the plan fiduciary, so mistakes hit the company balance sheet.
• Inconsistent process across locations, especially if the employer operates in multiple states with different wage laws.
• Risk of state wage claim, because a payroll team with no death-benefit training can easily miscalculate unused PTO under rules like Labor Code §227.3.

Three Real-World Scenarios With Actions and Outcomes

Key Entities Employers Must Coordinate With

The employer sits at the center of a web of public and private entities, and each one needs specific information within specific deadlines. The Social Security Administration pays survivor benefits and needs the date of death. The IRS needs Form W-2 and Form 1099-MISC, and the estate will need an EIN for estates under Form SS-4.

OSHA needs the fatality report within 8 hours for work-related deaths. The state workers’ compensation board needs a first report of injury. The plan administrator of the 401(k), pension, and welfare plans needs a death certificate and beneficiary paperwork. The state probate court may be involved if the final paycheck exceeds the small-estate threshold.

A common misconception is that the funeral home “handles everything.” The funeral home only files the death certificate and often notifies Social Security. Everything else falls on the employer, the estate, and the family.

Recap of Key Court Rulings

The courts have been clear on three points that every employer should memorize. First, the ERISA beneficiary form controls, even over divorce decrees and handwritten notes, per Egelhoff v. Egelhoff and Kennedy v. DuPont. Second, accrued vacation is a vested wage that survives death in states that recognize it as property, per Suastez v. Plastic Dress-Up. Third, a “must be employed on payout date” clause does not bar a deceased employee’s earned bonus in most federal circuits, per Schwartz v. Sun Co..

Each of these rulings has a direct consequence. Paying against the form exposes the employer to a fiduciary suit. Withholding accrued PTO in a vested-wage state exposes the employer to liquidated damages. Withholding an earned bonus exposes the employer to a wage claim and attorney’s fees.

FAQs

Does the employer still owe the final paycheck if the employee dies before payday?

Yes. The employee’s earned wages belong to the estate or statutory successor under state wage payment laws, and the employer must pay them on the state deadline, usually the next scheduled payday.

Can the employer pay the final check directly to the surviving spouse without probate?

Yes. Most states let the employer pay directly to a surviving spouse on a sworn affidavit if the amount falls below a small-estate cap, such as $18,450 in California.

Must the employer withhold federal income tax on wages paid after an employee dies?

No. Under IRS Revenue Ruling 86-109, post-death wages are not subject to federal income tax withholding, though FICA and FUTA still apply in the same calendar year.

Does the family get COBRA coverage after an employee dies?

Yes. Death is a qualifying event that gives the surviving spouse and dependent children up to 36 months of COBRA continuation, and the notice must be sent within 44 days.

Must the employer report a work-related death to OSHA?

Yes. 29 C.F.R. §1904.39 requires an employer to report any work-related fatality to OSHA within 8 hours by phone or online.

Does the 401(k) automatically go to the spouse?

Yes. Under ERISA §1055, a married participant’s 401(k) goes to the surviving spouse unless the spouse signed a notarized waiver naming someone else as beneficiary.

Can an ex-spouse collect the 401(k) if the employee never updated the form?

Yes. The Supreme Court held in Kennedy v. DuPont that the plan must pay the named beneficiary, even an ex-spouse, regardless of the divorce decree.

Does the employer owe unused PTO when an employee dies?

Yes. In states like California, Colorado, and Illinois, accrued PTO is a vested wage and must be paid to the estate under statutes such as California Labor Code §227.3.

Can the family sue the employer for a work-related death?

No. The workers’ compensation exclusive remedy rule bars most tort suits against the employer, though the family may sue third parties like equipment makers or subcontractors.

Does the employer issue a W-2 for wages paid after death?

Yes. For same-year payments, the employer issues a W-2 with FICA in Boxes 3 through 6 but $0 in Box 1, plus a Form 1099-MISC to the estate.

Must the employer offer bereavement leave to coworkers?

Yes. In states like Oregon, Illinois, and California, paid or unpaid bereavement leave is required by statute for covered employers.

Can the employer reverse a direct deposit posted after the date of death?

Yes. Under the NACHA Operating Rules, banks generally must honor a reversal request for a payroll deposit made after the employee’s date of death within five business days.

Does deferred compensation pay out immediately on death?

Yes. Most 409A plans accelerate on death and must pay the balance to the beneficiary within the plan’s window, typically 90 days, to avoid a 20% excise tax.

Can the employer keep a signing bonus if the employee dies during the clawback period?

No. Most courts and most plan documents waive a clawback when the separation is caused by death, because death is not a voluntary departure under cases like Schwartz v. Sun Co..

Must the employer tell coworkers how the employee died?

No. The employer should share only what the family approves, because medical details can raise HIPAA and state privacy concerns if they were learned through the company health plan.