Chapter 5: Providing Survivor Benefits
To Your Spouse
This chapter tells you what protections ERISA provides to your surviving
spouse if your benefit was vested upon your death. The following questions are
addressed:
- What
Happens To Your Benefits Upon Death?
- What Is A
Qualified Joint and Survivor Annuity (QJSA)?
- What
Is A Qualified Preretirement Survivor Annuity (QPSA)?
- What
Survivor Benefit Rules Apply To Most Defined Contribution Plans (Such As 401(k)
Plans)?
- Where
Can You Get More Information About QJSA And QPSA Rights?
ERISA provides some protection to surviving spouses of deceased participants
who had a vested pension benefit before death. The nature of the protection
depends on the type of plan and whether the participant dies before or after
payment of the pension benefit is scheduled to begin, otherwise known as the
annuity starting date. The summary plan description, described in Chapter 2,
will tell you the type of plan involved and whether survivor annuities or other
death benefits are provided under the plan.
In a defined benefit plan or a money purchase plan, the form of retirement
benefit payment, unless you and your spouse (if any) chose otherwise, must be a
series of equal, periodic payments over your lifetime, with a payment continuing
to your spouse for the rest of his or her life if he or she survives you. The
periodic payment to your surviving spouse must be at least 50 percent, and not
more than 100 percent, of the periodic payment received during your joint lives.
This form of payment is called a "qualified joint and survivor annuity" (QJSA).
If the plan provides other forms of benefit payment, and you and your spouse
want to waive your rights to receive the QJSA and select one of the other
payment forms available, you can do so according to specific rules. You and your
spouse must receive a timely explanation of the QJSA, your waiver must be made
in writing within certain time limits, and your spouse must give consent to the
waiver in writing witnessed by a notary or plan representative.
A survivor annuity must also be offered by a defined benefit or money
purchase plan if a married participant with a vested benefit dies before he or
she begins receiving benefits. This survivor annuity is called a "qualified
preretirement survivor annuity" (QPSA), and ERISA specifies how the QPSA is
calculated. You and your spouse must be given a timely explanation of the QPSA.
You may only waive the right to a QPSA in writing, and your spouse must consent
to the waiver of the QPSA in writing, witnessed by a notary or plan
representative.
Most profit sharing and stock bonus plan, like 401(k) plans, generally need
not offer a survivor annuity. However, there are rules for such plans that
protect the spouse as beneficiary.
Before you begin to receive your benefits under such a plan, your spouse is
automatically presumed to be your beneficiary. Thus, if you die before you
receive your benefits, all of your benefits will automatically go to your
surviving spouse. If you wish to select a beneficiary other than your spouse,
your spouse must consent in writing, witnessed by a notary or plan
representative. This protects your spouse in the event of your death before any
payout has been made. When you reach a distribution date, however, such as when
you terminate employment or reach retirement, you may choose, without your
spouse's consent, among any optional forms of payment offered by the plan,
including a life annuity, if offered by the plan. If you choose a life annuity,
however, your spouse is then protected by QJSA rules, and the benefit will be
paid as a QJSA unless you and your spouse consent to a different form, as
outlined above.
ERISA and the Internal Revenue Code prescribe detailed rules regarding the
QJSA and QPSA rights. You may wish to obtain from the Internal Revenue Service
the following publications on survivor annuities:
- IRS Publication 1565 -- "Looking Out for #2: A Married Couple s Guide to
Understanding Your Benefit Choices at Retirement From a Defined Contribution
Plan"
- IRS Publication 1566 -- "Looking Out for #2: A Married Couple s Guide to
Understanding Your Benefit Choices at Retirement From a Defined Benefit Plan."
These rules reflect the law in effect for participants who completed an hour
of service (or paid leave) on or after August 23, 1984. ERISA s survivor annuity
rules are different if you are the surviving spouse of a participant who left
employment before that date.
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