If a member dies before required distribution of the member's benefits has begun, the member's interest shall be distributed as follows:
(1) If the member has a surviving spouse, the surviving spouse shall receive benefits over the life of the surviving spouse beginning as soon as administratively possible and effective the month after the member's death; or
(2) If the member has no surviving spouse, the member's remaining interest shall be distributed in a lump sum payment to the designated beneficiary within five years from the date of the member's death.