McKay Hochman Document

[Effen]

We happened to read Section 6.6 of the McKay Hochman prototype db document and realized it contained what we thought was distressing language. Distressing primarily because we never knew it was there.

6.6 Eligibility For Death BenefitsThe Plan need not provide a pre-retirement death benefit, other than a qualified pre-retirement survivor annuity for the benefit of either the Spouse of a married Participant or for the benefit of a former Spouse under the provisions of a Qualified Domestic Relations Order. Additional incidental pre-retirement death benefits may be provided for by the Employer in the Adoption Agreement. Except as provided below for Participants who are employed after attaining the Qualified Early Retirement Age (as defined in paragraph 1.72), unless the Employer provides for an additional incidental death benefit, no benefit will be payable to the Designated Beneficiary of an unmarried active or terminated Participant who dies prior to Normal Retirement Age, even though such Participant may have had a vested and nonforfeitable interest in a deferred benefit payable at Normal Retirement Age. Notwithstand¬ing the above, a Participant who is employed after attaining the Qualified Early Retirement Age shall be given the opportunity to elect to have a Qualified Joint and Survivor Annuity or one of the optional forms of payment, become effective upon his or her death. To the extent that it is not in conflict with the provisions of Article VII, such election shall be made during the period beginning on the later of the 90th day prior to the Participant's attainment of the Qualified Early Retirement Age or on the date on which participation begins and ends on the date the Participant actually retires or terminates employment. The Plan may require a minimum not to exceed $1,000 before it will provide or increase an insured death benefit.

So, the appears to imply that even if the plan coded the death benefit to be the minimum REA QJSA (J&50 - spouse only), that upon the attainment of Early Retirement age, ANY participant can elect a different death benefit. Therefore, a single employee can elect a lump sum (assuming that is an available option) death benefit. If that is true, it becomes impossible to use McKay Hochman prototype for a sponsor that only wants the minimum death benefit.

Do McKay Hochman users provide election forms for participants attaining early retirement age? Could the estate sue the plan if they don't make this clear to the participants? "If dad would have known he could have elected a death benefit, he certainly would have elected a lump sum"

Anyone else familiar with this provision?