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What if Participant dies before signing 100% AP?


Guest toro0909

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Guest toro0909

sorry AP is referring to a 100% contigent Annuitant Option Plan

paritcipant became sick with cancer and requested pension. his intent was to select a 100% Annity option for his wife. While waiting for the materials he passed away. Subsequenty his widow was only granted the default 50%AP she now seeks equitable relief for the 100% AP.

Can a delay in delivery and proof of P's intent be used to show that survivor is entilited to the 100%AP?

If yes or no does anyone know any cases on point with similarties?

thanks in advanced

desperate summer associate

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Are you asking about an intent to elect a joint and 100% survivor annuity for a spouse or are you asking about an intent to award 100% of the participant's benefit to a former spouse alterrnate payee?

It sounds like the former, but you are on the QDRO message board and you use the term "AP."

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Guest Harry O

See Reg. 1.401(a)-20, Q&A 18 that would have applied (maybe) if the deceased participant had actually elected a 100% J&S and then died before the annuity starting date. This regulation may have permitted the surviving spouse to receive a 100% survivor benefit (assuming the 100% J&S was as valuable as the QJSA and otherwise satisifed the QJSA requirements).

But your deceased participant failed to make any election before death. I think the spouse is S.O.L.

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Toro: This looks like an assignment that has been inflicted by a feindish partner or senior associate as part of your initiation to law firm life (been there done that) and therefore you should know by now that it is higlhy unlikely that there is an answer to your question. Benefits under a plan covered by ERISA are the benefits provided under the plan since the plan formula is a settlor decision. ERISA only requires a 50% survivor annuity as the minimum benefit. The plan sponsor can provide a larger benefit but is not required to do so. While ERISA is a law of equity, the benefit options in excess of those required under ERISA are at the discretion of the plan sponsor. From the facts you have presented it does not appear that the participant completed the necessary steps to elect the 100% survivor annuuity, e.g. complete the requirement for requesting the 100% survivor annuity. Places to look for precedents: IRC 401(a) (11) for pre 84 cases on election of life annuity instead of 50% J & S and state law cases on changing LI beneficiary designation where insured dies before completing application to change LI beneficiary.

My question is who do you represent- the spouse or the plan sponsor who is concerned about being sued?

mjb

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  • 4 weeks later...

I am not sure I follow all of you. Apparently, the participant died before the annuity starting date, as he never submitted the forms, so now, the benefits should be paid as a QPSA to the bene, which should entitle her to full benefits, not 50% of a QJSA that never was started.

/JPQ

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  • 4 weeks later...

I believe the assumption is that the QPSA is a J&50, therefore, since the participant died prior to a benefit election, the QPSA kicks in and she gets 50% of the J&50.

100% of the J&100 may have been available if the participant had actually elected it, but he died prior to the election.

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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