Is it possible to amend a plan to remove the Joint Survivor Annuity?

[Guest Sara H]

We have some employers whose plans were started some years ago who have the Joint Survivor Annuity built into it. Is it possible to remove this with an amendment if that is what the employer or trustee wants?

[david rigby]

No, with respect to the benefits (account) already in existence.

[Guest RARogers]

You can't eliminate but you might be able to make it the alternative, rather than the normal, method of payment, so that the qjsa rules would apply only if the participant actually elected an annuity form of payment. See IRC ss 401(a)(11) and associated regs.

[Guest David Danziger]

I've always felt that you would avoid 411 problems as long as you preserve the QJSA as an alternate form.

However, Bill Lieber, an author on this subject, and an individual who was closely involved in the legislative process, believes that the spouse's right as a beneficiary is also protected. Thus, if you allow the participant to elect a lump sum without spousal consent, the spouse/beneficiary's right to an optional form is eliminated.

I do believe you can eliminate QJSA with respect to benefits that have NOT yet accrued.

------------------

[Guest RARogers]

It is certainly not well settled. But I have seen plans actually do it and they have received determination letters. Perhaps the conservative approach to take is to make the change on a prospective basis after receipt of the IRS letter.

Also, as I understand it, there is nothing from the IRS that formally says you can't do it, there's nothing that says that you can't amend the plan to change the normal form of benefit, and whether a spouse's "veto" rights are protected is questionable/debatable.