Death benefit to Niece or Spouse?

[Lori H]

a participant in a 403(b) recently passed away. The Designation of Beneficiary form on file from 1997 states the deceased participants niece will be his beneficiary. Last year the participant married. He never filled out a new DOB form. However, the death benefit will go to his new spouse, correct?

[Lori H]

The plan document states that "if a married participant dies prior to his annuity starting date, the administrator will direct the vendor to distribute a portion of the participants vested account balance to the surviving spouse in the form of a Qualified preretirement survivor annuity (QPSA), unless the participant has a valid waiver election in effect OR unless the participant and his spouse were not married throughout the one year period ending on the date of the participants death" So if they were not married for one year, would the niece be the beneficiary?

[Lori H]

the plan sponsor has confirmed the participant was not married to his spouse for one year at the time of death.

[Hojo]

Niece.

[Lori H]

hmm, that's what I was thinking initially, but then we got to discussing it in our office and thought that the fact that the spouse did not sign off on it would leave her open as beneficiary.

[Hojo]

The plan document states that "if a married participant dies prior to his annuity starting date, the administrator will direct the vendor to distribute a portion of the participants vested account balance to the surviving spouse in the form of a Qualified preretirement survivor annuity (QPSA), unless the participant has a valid waiver election in effect OR unless the participant and his spouse were not married throughout the one year period ending on the date of the participants death" So if they were not married for one year, would the niece be the beneficiary?

the plan sponsor has confirmed the participant was not married to his spouse for one year at the time of death.

Niece.

[masteff]

in the form of a Qualified preretirement survivor annuity (QPSA)

I see 2 separate issues. One is determining the beneficiary and the other is whether that beneficiary can receive a QPSA. QPSA is in code section 417.

My opinion is that the consensus is that when the QJSA and QPSA consent rules are involved, preexisting beneficiary designations naming alternate primary benes will become null and void at the moment of marriage.

So now you have to go back to your plan and read for a certain nuance... a spouse beneficiary who does NOT get the QPSA. It might simply mean she's treated mostly like a nonspouse; she might have to wait until a later date to take distributions or she might not get certain forms of distribution; just have to read your plan to figure it out.

The key is that the validity of the consent is not contingent on a year of marriage, rather it's the availability of the QPSA that requires the year.

(But the fact it's a 403(b) makes me less than 100% certain on the whole thing. I did find that some 403s can be subject to QPSA, so then it seems those rules would follow thru in full.) Edit: is the plan definitely subject to ERISA? Then my answer stands http://benefitslink.com/boards/index.php?/topic/51441-spousal-consent/

[Lori H]

The plan doc does have a QJSA provision as well and states even if the Participant was not married for a year an annuity can be purchased as a distribution option. Does the fact that the participant got married preclude the niece from receiving funds even if a new beneficiary designation naming the spouse was not made?

[Lori H]

in the form of a Qualified preretirement survivor annuity (QPSA)

I see 2 separate issues. One is determining the beneficiary and the other is whether that beneficiary can receive a QPSA. QPSA is in code section 417.

My opinion is that the consensus is that when the QJSA and QPSA consent rules are involved, preexisting beneficiary designations naming alternate primary benes will become null and void at the moment of marriage.

So now you have to go back to your plan and read for a certain nuance... a spouse beneficiary who does NOT get the QPSA. It might simply mean she's treated mostly like a nonspouse; she might have to wait until a later date to take distributions or she might not get certain forms of distribution; just have to read your plan to figure it out.

The key is that the validity of the consent is not contingent on a year of marriage, rather it's the availability of the QPSA that requires the year.

(But the fact it's a 403(b) makes me less than 100% certain on the whole thing. I did find that some 403s can be subject to QPSA, so then it seems those rules would follow thru in full.) Edit: is the plan definitely subject to ERISA? Then my answer stands http://benefitslink.com/boards/index.php?/topic/51441-spousal-consent/

yes it is subject to ERISA. thanks for link