QJSA

[Guest blabukiff]

An employee is single at the time of retirement. All procedures are followed.

After he is retired, he gets married. He now wants to elect a QJSA for he and his new spouse. The Plan is silent regarding this issue.

May/Must the Plan allow the new election? Case/statutory law that backs that up? Thanks!

[J Simmons]

Unless by its own terms the plan gives the employee already in pay status this right (doubtful--and the plan you're dealing with is, as you say, silent on this issue), then the plan is not so required to allow the new election sought by the employee. It's the employee's marital status as of the annuity starting date that is determinative. Check out IRC §417(d)(1); ERISA §205(f)(1); Reg. §1.401(a)-20, Q&A-25(b).

[david rigby]

... then no the plan is not so required ...

I assume this double negative is a typo. To clarify, it is extremely rare for a plan to permit a retired participant to change his/her election with respect to the form of payment, once payments have commenced. It is also likley that the plan is not silent on this point.

[J Simmons]

Thank you, pax. You are correct. The double negative was a typo, and now is gone through the magic of the editing function.

[Guest blabukiff]

It is also likley that the plan is not silent on this point.

Thanks for your help, guys. Let's say for the sake of argument that the Plan IS silent as to this point. My hunch is that the Plan therefore has discretion to allow or deny.

[Guest mjb]

Even if the plan is silent why would the plan admin allow a QJSA with the additional financial risk of having to pay benfits over two lives and estabish a precedent for future requests?

[Guest blabukiff]

Even if the plan is silent why would the plan admin allow a QJSA with the additional financial risk of having to pay benfits over two lives and estabish a precedent for future requests?

I agree. I just want to make sure we're giving the Plan the correct advice. My feeling from the get-go was that the law was pretty clear that the election made in the applicable time period is "binding", for lack of a better word. I wanted to make sure that there wasn't contradictory case or statutory law. Thanks!

[Guest blabukiff]

It's the employee's marital status as of the annuity starting date that is determinative.

So, let's say the employee is single at the time of retirement, but gets married before he receives any annuity payments. May he then elect a QJSA?

P.S. Looking more closely at the Plan language, it states quite clearly that to be eligible, the person must be married at the time of retirement. Is this controlling, or would the treasury regulations and code supercede?

[J Simmons]

I think you'll need to interpret the plan's language in the context of the requirements for QJSA quite carefully. Particular attention will need to be paid to IRS Reg §1.401(a)-20, Q&A-10(b)(2) and (d).

The treasury regulations and code do supercede the plan's language, if in conflict. To the extent there isn't a conflict, then the plan's language must be given a reasonable interpretation (and then that interpretation follwed thereafter).

The relevant point in time for the QJSA rules you are asking about is the annuity starting date. That's the first day of the first period for which an amount is payable as an annuity, or the first day on which all events have occurred that entitle the participant to a benefit (such as separation from service or consent to payment). IRC §417(f)(2), ERISA §205(h)(2)(A).

I would think if he's single at retirement, but is married--and has been for at least a year--as of his annuity starting date, he may elect a QJSA.

[Guest blabukiff]

Thanks everyone for all your help.

Another QJSA question...

The retiree is single at the time he retires. He is single at the time he begins receiving his annuity payments. He subsequently gets married.

The question is, now that he is married, is it MANDATORY that he get a QJSA? As you know, if he was married at the time of retirement, he is automatically enrolled in a QJSA (unless he and his spouse waive). Therefore, is a QJSA MANDATORY when he gets married?

[J Simmons]

Only if the plan documents say so; pension law only requires the QJSA if married (for at least a year) as of annuity starting date. If he was single on the first day of the period (say the month if his benefits are being paid monthly) for which the first benefits payment was made, then pension law doesn't require that he be given an QJSA when he later marries. The plan document might, however, give him that right.

[Guest blabukiff]

Thanks a lot.

Is there any case or statutory law that says that, or is it simply that by not saying it, the law implicitly rejects such a notion?

Thanks again.

[J Simmons]

The pension law (IRC §417(d)(1); ERISA §205(f)(1); Reg. §1.401(a)-20, Q&A-25(b)) substantively only requires the QJSA based on marital status at time of annuity starting date. If the plan document does not specifically give the EE more QJSA rights, then the EE only has the QJSA right required by the pension law.

[Guest blabukiff]

The pension law (IRC §417(d)(1); ERISA §205(f)(1); Reg. §1.401(a)-20, Q&A-25(b)) substantively only requires the QJSA based on marital status at time of annuity starting date. If the plan document does not specifically give the EE more QJSA rights, then the EE only has the QJSA right required by the pension law.

Great, thanks a lot!

[jpod]

I doubt very much the plan is silent.

But assuming that it is "silent," and further assuming that the PA might have some discretionary authority to allow or not allow a post-ASD conversion to a different form of annuity, you should consider whether it might be a breach of fiduciary duty to allow a conversion from a single to a j&s without undertaking some type of medical underwriting. I'm just throwing that out there, but quite frankly I think that if you read the documents carefully and critically you will conclude that a post-ASD conversion is not permitted. I think this is pretty clear in the IRS' LRMs, and if the pertinent boilerplate language in the document copies or follows the LRMs then there you go.

[Guest blabukiff]

The pension law (IRC §417(d)(1); ERISA §205(f)(1); Reg. §1.401(a)-20, Q&A-25(b)) substantively only requires the QJSA based on marital status at time of annuity starting date. If the plan document does not specifically give the EE more QJSA rights, then the EE only has the QJSA right required by the pension law.

What about the language in ERISA 205©(2) that says "Any consent by a spouse (or establishment that the consent of a spouse may not be obtained) under the preceding sentence shall be effective only with respect to such spouse." Does that mean that the waiver of consent due to there being no spouse only applies until such time as the employee gets married?

[J Simmons]

Under the pension law, you only need the consent of a 'spouse' that is such at the time of the annuity starting date. Not a later 'spouse'. There's the possibility of 'polygamy' when it comes to spousal rights. For example, an ex-spouse may yet be a 'spouse' as to part of the EE's benefits pursuant to a QDRO. If the EE marries again and has been so married for a year by the EE's annuity starting date, then the new spouse must consent to a waiver of the QJSA on the part of EE's benefits as to which the ex-spouse is not yet the 'spouse'; and the ex-spouse would have to consent to the waiver of the QJSA on the part of EE's benefits as to which the ex-spouse is, per the QDRO, yet the 'spouse'. The consent by one such 'spouse' does not waive the QJSA as to the benefits that the other is the 'spouse'.

[Guest blabukiff]

Under the pension law, you only need the consent of a 'spouse' that is such at the time of the annuity starting date. Not a later 'spouse'. There's the possibility of 'polygamy' when it comes to spousal rights. For example, an ex-spouse may yet be a 'spouse' as to part of the EE's benefits pursuant to a QDRO. If the EE marries again and has been so married for a year by the EE's annuity starting date, then the new spouse must consent to a waiver of the QJSA on the part of EE's benefits as to which the ex-spouse is not yet the 'spouse'; and the ex-spouse would have to consent to the waiver of the QJSA on the part of EE's benefits as to which the ex-spouse is, per the QDRO, yet the 'spouse'. The consent by one such 'spouse' does not waive the QDRO as to the benefits that the other is the 'spouse'.

I guess what I was wondering is that if there was no spouse, does the fact that there was no consent given (because none was needed) only apply to the non-spouse. Therefore, such a waiver would not apply to a subsequent spouse?

[masteff]

I guess what I was wondering is that if there was no spouse, does the fact that there was no consent given (because none was needed) only apply to the non-spouse. Therefore, such a waiver would not apply to a subsequent spouse?

You're over complicating it... the consent is only required at the ASD. It is a specific, singular event. There is no subsequent effect. What occurred on that date was binding on that date (unless the plan has some very unique clause allowing recalculation post-ASD).

[Guest blabukiff]

You're over complicating it... the consent is only required at the ASD. It is a specific, singular event. There is no subsequent effect. What occurred on that date was binding on that date (unless the plan has some very unique clause allowing recalculation post-ASD).

Gotcha. I just want to make sure I'm not overlooking anything. Thanks!