Changing Beneficiary of Post Retirement Death Benefit

[Guest BWNWE]

My company has a cash balance plan--actually it's a hybrid plan but lets just go with CB for simplicty.

The plan provides participants with the usual benefit options: Single Life, 50%, 75% and 100% J&S Annuities. The Plan also offers each of these benefits with a post retirement death benefit feature which, in the case of a single life annuity, provides a lump sum benefit to the participant's named beneficiary in the event that the participant passes away prior to receiving the full distribution of his/her account (and of course the payments continue to the participant even when the account balance at retirement is "exhausted"). If the participant elected a J&S w/ PRD, his/her benefit would be payable to the joint annuitant and, if there were a balance left at the time the JA passed away, the remaning balance would be paid to the named beneficiary of the PRD benefit.

So, with that little bit of information: An unmarried participant who has commenced benefit payments recently contacted us about changing the named beneficiary for his post-retirement death (PRD) benefit. He elected a the Single Life Annuity w/PRD. There is a reduction to the benefit if you elect a PRD option (example: Single Life annuity factor at age 63 is 10.02, Single Life Annuity w/PRD factor at age 63 is 97% of the Single Life Benefit)....don't really know why you would further reduce a benefit that is already actuarialy adjusted to pay out your entire accrued benefit based on your life expectancy but that's just me (meaning that if the annuity factor is 10.02 that should be calculated to reflect that your life expectancy is 12 x 10.02=10 years 2 months which should payout your entire benefit but that's neither here nor there). The Single Life w/PRD factor is not based on the participant's and named beneficiaries age, it's just based on the participant's age with a reduction for electing the PRD option.

Our plan is silent on changing the named beneficiary for the PRD benefit and I can't find ERISA guidance on the subject. Again, because the benefit is not based on the beneficiary's age (unlike a JA benefit...which is of course irrevocable), I don't see any reason why a participant couldn't change the named beneficiary of the benefit but I'm unsure. Any thoughts?

[david rigby]

This PRD sounds like an installment refund annuity, or maybe a cash refund annuity.

For an unmarried participant, the plan (probably) does not care who the beneficiary is, so it should not object to the participant changing the beneficiary designation. Although you may have to read between the lines a bit, I'll guess the plan already specifies the answer to this question. If there is nothing in the Plan, does the plan sponsor want to amend the plan to clarify that the unmarried participant has this right? If so, amend away.