Determining whether spousal consent is required

[Guest BOK]

Have a cash balance plan that is valued monthly. Spousal consent not required if balance is less than $5000. When a participant terminates, the prior month end balance is used to determine whether a spousal consent form needs to be included with other forms and disclosures. A participant that has $4,900.00 when forms are sent, could exceed $5,000 by the time the forms are returned and processed. Do you think we should have to go back and get spousal consent if that happens? Do you know where there are any rulings or information on this?

[Effen]

I don't think you can "value the plan monthly". A cash balance plan is a defined benefit plan and therefore if the participant doesn't receive the present value of their annuity on the date of distribution you have improperly reduced their accrued benefit. I don't know what it means to value it monthly. The value of the accounts change daily.

That said, I think if the amount of the distribution exceeds $5,000, the spousal consent rules apply.

We generally give 2-3 months of lead time for election forms. In other words, if a request comes in in May, the election package we send assumes the lump sum will be paid in August. It also contains a big note that if it is not paid by August, it will need to be re-caclulated.