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Meaning of joint and survivor annuity for QDRO purposes


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What exactly does the phrase "...form of a joint and survivor annuity with respect to the alternate payee and his or her subsequent spouse..." mean under ERISA 206(d)(3)(E)(i)(III)? Does this restriction apply to ANY J&S that is available under the plan or simply the QJSA? I concede, that the statute is clear on its face and precludes any form of J&S for an alternate payee and his/her subsequent spouse. However, the FAQs issued by the DOL on QDROs and Drafting QDROS both specifically say that a QUALIFIED JSA is prohibited. Which interpretation is correct?

Also, on a related note, if a jsa is an optional form of benefit, could the alternate payee name his/her sister, child, etc. as the joint annuitant?

Thanks.

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Nothwithstanding popular (and DOL) misconceptions, the statute and its counterpart in section 414(p) of the Internal Revenue Code is very narrow and is an exception to the broader rule that alternate payees are entitled to receive any form of benefit that a participant can receive (see the last sentence in Q&A 3-8 of the DOL QDRO book) unless you think section 206(d)(3)(J) trumps other provisions. The DOL seems to have forgotten about (J) when it wrote Q&A 3-8.

Read (E) carefully in its entirety. First, it is a provision that says only that a DRO shall not be treated as failing to qualify if it requires the plan to pay benefits at earliest retirement age (as defined) even if the participant is not entitled to a distribution yet. It is an exception to the general rule that a plan can't make a plan pay a benefit that it is otherwise not designed to pay.

Now, realizing that we are in an exceptional situation, we find that if the order takes advantage of the exception (early retirment age payment), it must limit itself to forms of benefit available under the plan other than a j&s with the subsequent spouse of the AP as the "s."

It does not say that the plan can't ALLOW the AP to have a j&s with a subsequent spouse or anyone else (the plan simply can't disqualify if the conditions are met -- including no j&s for AP and subsequent spouse). It also does NOT say that, in other situations outside the exception, the DRO cannot provide for the AP to have a j&s form of benefit with a subsequent spouse or anyone else. Note that under the old 401(a)(9) rules, the AP could not have a j&s with anyone else (except the participant), so 401(a)(9) effectively created a rule that eveyone mistakenly attributed to ERISA and section 414(p) of the Code. I don't know what the 401(a)(9) rules provide now. If you do, please explain for us all.

To respeond to your specific question, I don't think the words are limited to a QJSA, but the whole idea appears in an exceptional context that gives the DRO an unusual statutory right to violate plan distribution terms. It is also a statutory requirement that certain plans offer QJSA distributions, so the two may be related in concept. If so, the drafters did a bad job of getting the point across and I think you can read the statute in plan English/Actuary to conclude that it does not mean only QJSAs.

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Guest FormsRmylife

It seems to me that a joint and survivor distribution under a QDRO is limited by who can be an alternate payee. Only the former spouse and children can be an alternate payee.

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