Help! Eliminating QJSA from ERISA 403(b)

[Guest IRISH79]

Can QJSA and installment options be eliminated as optional forms of benefit from a 403(b) plan?

[jpod]

My understanding has been that an ERISA 403(b) is subject to mandatory QJSA requirements (because it doesn't seem possible to characterize a 403(b) as a "profit sharing" plan). Therefore, you cannot eliminate the QJSA.

As to other options, I can't think of a reason why you can't eliminate options to the full extent allowed by the 411(d)(6) regs, but only to the extent allowed by those regs.

[Guest mjb]

IRS has permitted np to maintain PS plans on the basis that "profit" is difference between revenues and expenditures. QJSA only applies to MP plans that provide for fixed contributions, e.g. 10% a yr. Why can't 403b plan provide for discretionary employer contributions declared on an annual basis since IRC 403b does not require fixed contributions. 403b plan can be funded with mutual funds that pay only a lump sum distribution. ERISA plan that has provided QJSA where there are no fixed employer contributions can only eliminate QJSA on prospective contributions after plan is amended.

[Locust]

If the assets are invested in insurance contracts (as opposed to a custodial account holding mutual funds), it is likely that there is a lifetime annuity payment option. The rules on whether you have to have a QJSA when a lifetime annuity option is available are complicated, but the bottom line is that the 403(b) plan may have to comply with the QJSA rules if it is in an insurance contract. [it is the same set of rules that apply to profit sharing plans with lifetime annuity options, except that in most insurance contracts, there won't be an option of eliminating the lifetime annuity option.]