QJSA Elimination

[Guest John Kleeman]

I am taking over a 401(k) plan which contains Money Purchase Assets that were merged into the 401(k) plan. I cannot support the QJSA benefit, so I am trying to find a way to eliminate the QJSA option upon plan restatement.

Does anybody know if this can be done?

[JanetM]

Not in restatement. As long as you have MP funds you are stuck with it.

[Guest mjb]

Only way to get rid of the annuity benefit rights for all participants is to terminate the plan and offer all participants with more than 5K the right to purchase an annuity and hope that they waive it in which you can then pay a lump sum.

[Guest John Kleeman]

What do you think about this idea? We have each participants with MPP assets sign some type of notice or waiver that says when the plan is restated and assets transfer, the QJSA benefit will be eliminated and have the spouse sign as well. That way we have obtained permission from the participant and spouse to waive the QJSA distribution option. Then when the assets come over, the MPP assets are treated as rollover assets instead of transferred pension assets.

Only way to get rid of the annuity benefit rights for all participants is to terminate the plan and offer all participants with more than 5K the right to purchase an annuity and hope that they waive it in which you can then pay a lump sum.

[John Feldt ERPA CPC QPA]

Do you think the IRS agree with that too? You could try a private letter ruling, but without that I don't see that this idea gets a qualified plan out if the QJSA requirements.

[Mike Preston]

De-merge. (Spin off).

[Blinky the 3-eyed Fish]

What does it mean that you can't support a QJSA benefit?

[Guest John Kleeman]

It means that the funding vehicle is simply an open architecture Mutual Fund-Collective Fund platform that is not affiliated with an insurance company and thus cannot offer an annuity that the QJSA rules requre.

What does it mean that you can't support a QJSA benefit?

[Bird]

It means that the funding vehicle is simply an open architecture Mutual Fund-Collective Fund platform that is not affiliated with an insurance company and thus cannot offer an annuity that the QJSA rules requre.

NBD. First, no one will take an annuity, second, on the remote chance someone does, you just buy one from an insurance company.

FWIW-

I don't like the idea of having the participants and spouse waive the QJSA; I see no basis for that offer.

I don't understand the comment about the spin-off. You'd have to spin-off to somewhere, and that plan would have the same problem.