Rehired Retirees/Death Benefits

[Guest ircreader]

A rehired retiree dies while an active employee. The plan says you restart the benefit he elected at 1st retirement but add in the additional accruals for the second term of employment. He elected a straight life annuity (SLA) at 1st retirement. He was married and his spouse consented. Do you offer the QPSA on all benefits earned or do you just offer the QPSA on the benefits earned during the second period of employment (since the spouse never consented to an SLA on that piece)?

[Effen]

Just a thought, but since he was active when he died, could you argue that he should qualify for the active death benefit? I don't know if waiving post retirement spousal coverage is the same as waiving the Pre-retirement Survivor Annuity when he comes back to work.

[mbozek]

It appears to be a matter of plan interpretation where the plan admin can go either way. Why not do the right thing and allow the ss to elect the spousal death benefit on all benefit accruals on the theory that reemployment required that the spouse give a new consent to waive the spousal annuity rights.

[david rigby]

When rehired, was the benefit suspended?

[Guest ircreader]

pax - sorry, forgot that detail. Yes, benefits were suspended.

mbozek & Effen - thanks for your thoughts. they are good ones.

[RTK]

Thoughts and comments.

My standard (single employer) db plan language covers this as follows: (1) if rehired before nra (which does not use dol suspension rules), prior form of payment election revoked and entire accrued benefit paid under pre-retirement death benefit provisions, including qpsa; and (2) if rehired after nra, form of payment election applies for all purposes including for purposes of the payment of additional benefit accrued after rehire. Thus, in my case, the document provides the rules. Other documents might as well.

If no document provisions, 1.401(a)-20 Q&A 10(d) provides some default rules from IRC tax qualification perspective.

[Guest ircreader]

Thanks, RTK!