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qdcf plan and spousal consent

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#1 Hans Lewis

Hans Lewis

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Posted 15 April 2006 - 12:51 PM

Can anyone give a legally correct answer to this question and provide sources to support the answer. I currently have a funds in a QDCF plan (Qualified Deferred Comp Funded plan). I would like to start taking distributions now. However, the form requires "spousal consent" because my spouse is the beneficiary. It doesn't seem fair that I can not even retrieve my own retirement funds if my spouse doesn't care to cooperate. Is this requirement legal or just an attempt to retain my funds and cover themselves. I don't know if this is considered a 457 plan or not.


#2 QDROphile


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Posted 15 April 2006 - 01:58 PM

For certain plans, the law requires that benefits be paid in the form of a joint and survivior annuity unless the spouse consents to another form of payment. The law does not prevent payment from starting, but restricts the form. See section 401(a) (11) of the Internal Revenue Code. Without knowing more about the plan, no one can answer your question.

Most plans except for IRA-based plans are restricted in some way from paying benefits whenever the particpant may want to receive them. As an oversimplified generalization, benefits are usually not payable before termination of employment. Different rules apply to different plans, with similar effect.

In addition to what the law requires, a plan may be designed to be more restrictive concerning spouse consent and when particpants are eligible to start benefits.

Most plans have a summary plan description, which is provided to all particpants and is available upon request. The SPD will describe the requirements for distributions, but will probably not tell you if the requirement arises because of law or plan design, and it probably does not matter, no matter how you feel about the restrictions. If the plan is holding up payment beyond what the SPD says, then it is possible that something is wrong.