QOSA Requirement

[Young Curmudgeon]

A plan already offers a 100% J&S and a 50% J&S annuity. Do I still need to add the QOSA 75%? 417(g) indicates my applicable percentage for a 100% J&S is a 50% QOSA.

[Andy the Actuary]

If you make automatic form J&100%, you're fine; else, if J%50% is automatic form, need to offer J&75%.

[Blinky the 3-eyed Fish]

The QJSA is important, not the normal form. What is the QJSA, 50% or 100%? If it's 100% and the 50% form is actuarially equivalent to the SLA, you are fine. If it's 50% you need a 75% option.

[Young Curmudgeon]

If you make automatic form J&100%, you're fine; else, if J%50% is automatic form, need to offer J&75%.

So the distinction is which is the normal form? Mine is J&S 50%, the optional form is the J&S 100%, hence I need the QOSA?

[Andy the Actuary]

Yup, a J&75% opion is needed unless the plan is amended to make the J&100% the automatic form and the J&50% an optional form.

[tuni88]

What is the whys and wherefores for this 75% business? How did it come about? What does it fix? And when do we have to amend our plan?

[Guest GMP]

The weirdness is that the law requires exactly 75%, rather than at least 75%, if the QJSA is a J&50. Took a while to get my thinking around that.

[Young Curmudgeon]

What is the whys and wherefores for this 75% business? How did it come about? What does it fix? And when do we have to amend our plan?

I believe you amend by the last day of the first plan year after 01/01/09, operate in compliance for distributions with annuity starting dates in plan years beginning after 12/31/07. There's a decent Q&A in Notice 2008-30.

[Guest TaftHart]

Does this also apply to a plan that provides a 50& QJSA option but that subsidizes the surviving spouse at an 80% level? Why would a plan need to add 50% option when it wouldn't benefit the participant in any way?