pre-retirement survivor annuity for MPP

[Guest cculhane]

A client with a money purchase plan dislikes the wording on the "Notice of pre-retirement survi. annty" form. She specifically thinks the wording of "the Plan will use 50% of your Account Balance to purchase a pre-retirement annuity for your spouse" is misleading and particpants want to know what happens to the other 50% of the account balance and can that be wriiten into this notice. Any thoughts?

[Dave Baker]

Know what you mean. I have put something like this into my forms:

"No matter who you might name as your beneficiary, the plan must pay half (50%) of your account to your surviving spouse, because he or she has a right to half of your account balance after your death as a matter of Federal law. (Further, your surviving spouse will have the option of having that 50% share paid to him or her in the form of an annuity contract purchased by the plan.) If you'd like someone else to receive some or all of the spouse's 50% share (for example, you'd like to have 100% of your account pass to your children in equal shares, not 50% to your surviving spouse and the remaining 50% to the kids), your spouse certainly can allow you to do so by signing the appropriate place on your beneficiary designation form. But it is up to him or her to decide whether he or she will "consent" to your "waiver" of the surviving spouse's right to his or her 50% entitlement."

[Dowist]

Another approach is to say something like:

If you die, your account will be divided into two equal parts. One-half of the account is the "marital" part. If you were married on the date of your death, this one-half of your account will be paid to your spouse unless you have elected another beneficiary with your spouse's consent. The other half of the account is the "nonmarital" part. This one-half of your account will be paid to whomever you have chosen as your beneficiary (whether it is your spouse or some other person) by completing and submitting a beneficiary designation form to the . . . "