Distributions of Death Benefit

[flosfur]

Death benefit under a DB plan is actuarial equivalent of accrued benefit. Normal form is life annuity.

1) Other than the election to rollover or not the lump sum distribution, the beneficiaries don't need to be given the option of J&S - 50% or otherwise?

2) Do they need to be given the life annuity option (because that's the normal form)?

3) Does the 30-day wait period apply to payments to beneficiaries?

[Guest Sieve]

The answers ought to be in the Plan document. Our answers would only be guesses.

[flosfur]

The answers ought to be in the Plan document. Our answers would only be guesses.

I was more interested in what the law requires as it pertains to non-spouse beneficiary.

The document only refers to "participant's" rights when addressing the QJSA and 30 day wait period.

[RTK]

My quick take assuming payment to a nonspouse beneficiary.

1. 402©(11) provides for nonspouse beneficiary direct rollovers. The IRS's position at this time appears to be that these are optional. Thus, the plan document needs to be consulted to determine whether or not direct rollover must be offered.

2. No requirement to provide nonspouse beneficiary with a life annuity form of payment. But plan can provide for this form of payment in the document.

3. 30-day notice required for 411(a)(11) consent notice, 401(a)(11)/417 qjsa/qpsa notice, and 402(f) rollover notice. 411(a)(11) does not apply to death benefits. 401(a)(11)/417 qjsa/qpsa does not apply to nonspouse beneficiaries. 402(f) notice (currently) not required for nonspouse beneficiary rollover. But plan should be able to provide for a "wait period" for such payment in the document.

[Guest Sieve]

I agree with RTK, but would offer the folllowing additional comments:

1) Law does not require that J&S or any other specific type of benefit be offered to a non-spouse beneficiary, so it's not required unless the plan specifies otherwise. Of course, if there happens to be a spouse at the time of death (in addition to a non-spouse beneficiary), then the spouse will be entitled to a QPSA unless the spouse consented to the designation of the non-spouse beneficiary (or disclaimed the benefit after death).

3) Pre-distribution consent is also required pursuant to ERISA Section 203(e)(1), but the regs under IRC Section 411 control (and they state that the consent requirements do not apply after the participant's death).

[flosfur]

My quick take assuming payment to a nonspouse beneficiary.

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Thanks. That's very helpful.