QJSA: Most Valuable Form of Benefit

[BTG]

I am trying to ascertain the effect of the language in Treasury Regulation 1.401(a)-20, Q&A-16 which requires that the QJSA be the most valuable form of benefit.

Our client is faced with a situation where--due to a significantly older spouse (20+ years) and the actuarial conversion factors set forth in the plan--there is no reduction to the monthly benefit payable for the participant's lifetime in order to convert to any of the J&S forms. Essentially, the plan's benefit formula is giving the spouse such a slim chance of surviving the participant, that they're not going to reduce the participant's monthly benefit to account for this contingency.

The problem is that the plan specifies the 50% J&S form as the QJSA. However, if the participant can get a 50% survivorship piece or a 100% survivorship piece on the same lifetime benefit, obviously the 100% J&S is going to be actuarially more valuable.

Treasury Regulation 1.401(a)-20, Q&A-16 provides that "if a plan has two joint and survivor annuities that would satisfy the requirements for a QJSA, but one has a greater actuarial value than the other, the more valuable joint and survivor annuity is the QJSA." (emphasis added) The way I read this language, the more valuable form would automatically become the QJSA. So, in my case, the 100% J&S would be the QJSA with respect to this participant, notwithstanding the language in the plan calling for the 50% J&S.

Am I reading this reg correctly?