QPSA and QOSA

[PensionPro]

Surviving spouse is entitled to 50% QPSA or 75% QOSA.  He wants to maximize the benefits from this source, because the remaining benefits are going to be split.  Is the 75% QOSA more valuable, or am I missing something?  Thank you.

[Effen]

You (or we) are missing something. 

Is "he" the participant? 

What "remaining benefits" are you referring to?  (Is this a divorce/QDRO question?)

"Value" from whose perspective?  

To answer your question directly, there s/b a relative value disclosure with the election form.  That said, typically, the QPSA and QOSA are relatively equal in value from the participant's perspective.  However, from the spouses perspective, 75% of something is obviously a bigger number than 50% of something, even though those somethings are slightly different. 

[fmsinc]

Wow. In 38 years of preparing thousands of QDRO I have never come across a QOSA.  But assuming I know what it is and the rationale for it's existence, logic compels me to suggest that the Alternate Payee is going to receive one or the other, not both.  If the Participant dies before retirement the QPSA will be computed in one way; and if the Participant dies after retirement the QOSA (or QJSA) will be computed in some other way (or maybe not). The Alternate Payee doesn't get both and the Alternate Payee is not in control of that he/she receives. 

So it seems that in order to maximize the benefits the Participant needs to determine whether he should kill himself before retirement or retire while he is still alive to retire. 😄

Or perhaps ask the actuary.  

[Bri]

A QOSA is just an IRS rule indicating what level of survivor portion must be made available to the participant as an Option, depending on what's the plan's default QJSA level.  Typically "actuarially equivalent".

[fmsinc]

So rare is QOSA that I searched every appellate decision, State and Federal, in the USA and found only a handful of cases that even mention the option. 

See https://scholar.google.com/scholar?start=0&q="Qualified+Optional+Survivor+Annuity"&hl=en&lr=lang_en&as_sdt=20000006&as_vis=1

Some of these cases discuss value, but it's my impression that it's actuarial value  based on the life expectancies of he parties that ignores the fact that you might walk out of your house tomorrow and get run over by a bus.

Learn something every day. 

David