Required payments for terminated participant past NRA who dies before

[Guest Ted H Munice]

A terminated participant who reached NRA was given the paperwork to process her benefit from a DB plan. Subsequently she died (a couple of years later) before returning the paperwork. Is the plan obligated to pay back payments of the 50% J&S benefit from NRA to date of death to her estate (assuming she was married)? If not, does the spousal death benefit have to be based on the accrued benefit with an actuarial increase from NRA to date of death?

[david rigby]

As in so many cases, the answer begins with "what does the plan say."

Most plans address the case where a participant is eligible to retire but dies before actually retiring. Likely, there are no "back payments" but careful review of the death benefit provisions is required.

The most likely benefit is to the surviving spouse, assuming the employee had retired the day before death, probably with a J&S form of benefit with x% continued to the surviving spouse. ("x" is at least 50, could be 75 or 100, etc. Review the death benefit provisions.)

If the death benefit is defined similar to this shorthand description, then the first thing to determine is the employee's accrued benefit. If an actuarial increase of the NRD benefit should be included in that, so be it.

Beware that there may be no benefit if there is no surviving spouse.

[Alonzo]

I don't know I agree with PAX here. The participant had reached NRA. This means 401(a)(14) comes into play, unless the employee had participated in the plan for less than 10 years. That Code section would require payments retroactive back to the 60th day after the close of the plan year in which the employee terminated.

Plan language can help, if the Plan truly requires in its language that the participant applies for his benefit or else he will not receive it.

[Guest Ted H Munice]

The plan does have the following language: "In no event, however, shall payments begin until the Participant has properly completed and returned for processing any administrative forms required by the Administrator." Does this language preclude the requirements of 401(a)(14)?

[Alonzo]

That should work.