Can you force a Death benefit over $5,000 after age 62?

[Guest eazycool]

I have a plan that would like to force a distribution of a death benefit. However, the amount is over $5,000 and the surviving spouse does not want to take the money right now. I recently read the following sentence in the 2004 Pension Answer Book under Q 10:55, "A surviving spouse can demand the surviving portion of the QPSA not become payable following the participant's death until such time as the participant would have attained age 62 if the amount of the benefit exceeds $5,000." Does this mean that if they spouse's benefit is still in the Plan 2 years from now when the participant would have turned 62 the benfit can be paid (forced) out without the spouse's approval and signiture?

Please help!

[mbozek]

I thought that the consent requirements do not apply after the death of the participant. Reg. 1.411(a)-11©(5). The consent requirement prior to age 62 only applies to the participant. See reg. ©(4).

[MGB]

There are a number of different issues that are being mixed together here. Be sure to correctly use appropriate terminology. Mainly, the plan document is the controlling answer.

A QPSA is an annuity payable at retirement to the spouse. A plan "may" allow it to be taken as a lump sum. That cannot be forced unless less than $5,000. If the spouse wants an annuity, that is their choice.

The non-application of the consent requirements only means that the plan can force the payment of the annuity (not the lump sum). A spouse always has the right to receive the QPSA as an annuity. The date that the annuity starts should be described in the plan. Age 62 has nothing to do with it. It most likely will be the earliest retirement age eligibility in the plan.

The original question used the terms "death benefit" and "QPSA". These are not identical terms. If there is a death benefit in excess of the QPSA, the terms of the plan will define how that is paid. For example:

Assume a plan has a lump sum death benefit equal to the present value of the accrued benefit. Also assume the QPSA is defined as a 50% J&S. Assume the present value QPSA is equal to 40% of the present value of the accrued benefit. Without consent, the plan can pay 60% of the value of the accrued benefit as a lump sum ($5,000 does not apply here) and the remaining 40% must be paid as a (deferred, if applicable) annuity, unless the plan allows the QPSA to be paid as an immediate lump sum AND the spouse elects to have it paid as a lump sum (this last provision is overridden if the value is less than $5,000 -- it can then be a forced cashout without consent).

[Guest eazycool]

Thank you for your response. I would just like to make sure I am clearly understanding your reply.

Since the Plan I am working on offers a lump sum death benefit equal to the present value of the accrued benefit and the QPSA is defined as a 50% J&S, if the present value of the QPSA is equal to 30% of the present value of the accrued benefit, the other 70% could be forced out without consent even if it is over the $5,000. The remaining 30% could then either be deferred (if applicable), paid as an annuity, or if the remaining amount is under $5,000 it could then be forced out without consent. However, if the remaining 30% is over $5,000 it cannot be forced out without consent.

Thank you!