OK for profit sharing plan document to pay just half of participant's

[Guest PALAWYER]

Recently was presented with a plan document that states that where a spouse does NOT provide consent, a lump sum will be paid when requested by a participant as follows: 50% of lump sum to Participant or Participant's designated beneficiary and 50% to Spouse. Note: this is lump sum and not and annuity. Is this permissable? My reading of J&S and consent rules in Code make me question this. Please help

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[Chester]

As long as this is an ERISA qualified plan and the lump sum is greater than $5,000, then the spouse must consent to a lump sum distribution, and what you are describing in the plan document is illegal.

[QDROphile]

More information is needed. Chester's answer is probably correct for a defined benefit plan or money purchase pension plan. But if the plan is not subject to the J&S rules, it could be OK.

[Guest PALAWYER]

Its a Profit Sharing Plan

[Guest Harry O]

Still need more info . . .

1. You say that "where a spouse does NOT provide consent" . . . consent to what? Consent to waive the QJSA which is the normal form of benefit or simply consent to designate someone other than the spouse as beneficiary of the account in the event of the participant's death?

2. You mention that 50% of the participant's account could be paid to his beneficiary and the remaining 50% to his grieving spouse. Does the plan provide that the spouse must have consented to this split of the death benefit?

3. Finally, and most important, what is the normal form of distribution under the plan? Is an annuity benefit only an optional form of benefit that kicks in the QJSA rules only if the participant elects an annuity other than a QJSA? Or is the presumptive form of benefit for a married employee a QJSA?