Pre- Retirement Survivor Death benefits

[Guest smug]

Our plan document calls for a PRSA benefit based on a 50% JS form of benefit and a survivor benefit is paid using the 50% JS form if the participant dies prior to the annuity starting date. However, it was pointed out this may not be correct per IRS Reg. 1.401(a)-2, Q&A 18, because of the last sentence in that Q&A whcih states:

"Q-18: What is a qualified preretirement survivor annuity (QPSA) in a defined benefit plan?

A-18: A QPSA is an immediate annuity for the life of the surviving spouse of a participant. Each payment under a QPSA under a defined benefit plan is not to be less than the payment that would have been made to the survivor under the QJSA payable under the plan if (a) in the case of a participant who dies after attaining the earliest retirement age under the plan, the participant had retired with a QJSA on the day before the participant's death, and (b) in the case of a participant who dies on or before the participant's earliest retirement age under the plan, the participant had separated from service at the earlier of the actual time of separation or death, survived until the earliest retirement age, retired at that time with a QJSA, and died on the day thereafter. If the participant elects before the annuity starting date a form of joint and survivor annuity that satisfies the requirements for a QJSA and dies before the annuity starting date, the elected form is treated as the QJSA and the QPSA must be based on such form.

The Plan appears to be inconsistent with the Q&A since the plan will pay based on a 50% JS but the Q&A seems to requires the payment be based on the election the Particicpant may have made 180 days prior to the annuity starting date.

Has anyone dealt with this question?

[SoCalActuary]

This states that the default preretirement survivor annuity is based onthe 50% J&S conversion factor.

If a participant has elected an alternate approved QJSA form of payment because they were eligible for benefit payment, but then died, the plan would have to honor the elected form of payment.

[david rigby]

If a participant has elected an alternate approved QJSA form of payment because they were eligible for benefit payment, but then died, the plan would have to honor the elected form of payment.

Never seen a plan that did not do this in practice, even if the document was ambiguous.

[Guest angelf]

According the the plan and the DOL, the plan does not have to pay any benefits until the plan participant had reached the EARLIEST retirement age, in most cases that's 55 years of age. Does anyone know if there have been any successful legal challenges to this earliest retirement age provision in ERISA? Drop me a line at angel.l.fernandez@gmail.com

[Guest angelf]

Sorry, you did say that your plan was modeled on the QJSA, follow the link to the IRS Form 6042 Compliance worksheet dated 2006, the most recent release of this form.

http://www.irs.gov/pub/irs-pdf/f6042.pdf

In short it states:

Section __________ of the plan should be amended to provide that the participant’s nonforfeitable accrued

benefit will be payable in full, upon the participant’s death, to the surviving spouse. The plan may provide

that this benefit will be paid instead to a designated beneficiary if the participant executes a written waiver of the

spousal benefit, the spouse consents to the waiver, and both the waiver and the spouse’s consent state the specific

nonspouse beneficiary. IRC section 401(a)(11)(B) and Regs. section 1.401(a)-20 Q&As 3, 32 and 33