QPSA and rollover

[Guest Penny17]

My question deals with a 401(k) profit sharing plan participant who died at age 58 while employed. He did not sign a beneficiary designation form, but the plan has a default provision making his wife the sole designated beneficiary. The normal form of benefit is a QPSA, and the plan allows for optional forms, including LSDs. The plan does not have a provision allowing the spouse to change the form of benefit after the participant’s death. It does, however, allow direct rollovers to eligible retirement plans of eligible rollover distributions. My understanding is the spouse can postpone distributions until the participant would have reached age 70 ½. Could she, during this intervening period, directly roll over the account to an IRA in her own name, even if the benefit is slated to be paid in a QPSA form in 12 or so years? One part of this theory is that it is not yet being paid in substantially equal payments over her lifetime.

My life would have been much easier if the P & S had just signed the BD form!!! Thanks for any help.

[QDROphile]

If the plan document is as you describe, the document sucks and you should take it out on the document, the document provider or the person responsible for adopting the document. This should be an easy bind to get out of, but I think some guilty party should be made to sweat a bit. You will probably get a helpful post from someone less judgmental and less punitive.

[masteff]

The plan does not have a provision allowing the spouse to change the form of benefit after the participant’s death.

My opinion is that statment is merely semantics.... unless you can definitively show that the participant had elected a form of benefit and was locked into that form of benefit prior to his death. But in that case, it would potentially supercede the QPSA as well.

Otherwise, the spouse should be able to make an election, which you state includes both the QPSA and several optional forms.