7.11 Survivor Annuity for Spouse

If you have been married for at least a year as of the annuity starting date, the law generally requires that payments to you of vested benefits be in a specific annuity form to protect your surviving spouse. All defined benefit and money purchase pension plans must provide benefits in the form of a qualified joint and survivor annuity (QJSA) unless you, with the written consent of your spouse, elect a different form of benefit. A qualified joint and survivor annuity must also be provided by profit-sharing or stock bonus plans if you elect a life annuity payout or the plan does not provide that your nonforfeitable benefit is payable in full upon your death either to your surviving spouse, or to another beneficiary if there is no surviving spouse or your spouse consents to the naming of the non-spouse beneficiary.

Under a QJSA, you receive an annuity for your life and your surviving spouse receives an annuity for his or her life that is no less than 50% of the amount payable during your joint lives. You may waive the QJSA only with your spouse’s consent. Without the consent, you may not take a lump-sum distribution or a single life annuity ending when you die. A single life annuity pays higher monthly benefits during your lifetime than the qualified joint and survivor annuity. If benefits begin under a QJSA and you divorce the spouse to whom you were married as of the annuity starting date, that former spouse will be entitled to the QJSA survivor benefits if you die unless there is a contrary provision in a QDRO (7.12).

The law also requires that a qualified pre-retirement survivor annuity (QPSA) be paid to your surviving spouse if you die before the date vested benefits first become payable or if you die after the earliest payment date but before retiring. The QPSA is automatic unless you, with your spouse’s consent, agree to a different benefit.

Your plan should provide you with a written explanation of these annuity rules within a reasonable period before the annuity starting date, as well as the rules for electing to waive the joint and survivor annuity benefit and the pre-retirement survivor annuity.

Planning Reminder

Spouse Must Consent in Writing to Your Waiver

Your spouse must consent in writing to your waiver of a required annuity and the selection of a different type of distribution. A spouse’s consent must be witnessed by a plan representative or notary public. An election to waive the qualified joint and survivor annuity may be made during the 180-day period ending on the annuity starting date. An election to waive the qualified pre-retirement survivor annuity may be made any time after the first day of the plan year in which you reach age 35. A waiver is revocable during the time permitted to make the election.

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Plan may provide exception for marriages of less than one year.

The terms of a plan may provide that a QJSA or QPSA will not be provided to a spouse of the plan participant if the couple has been married for less than one year as of the participant’s annuity starting date (QJSA) or, if earlier, the date of the participant’s death (QPSA).

Cash out of annuity.

If the present value of the QJSA is $5,000 or less, your employer may “cash out” your interest without your consent or your spouse’s consent by making a lump-sum distribution of the present value of the annuity before the annuity starting date. After the annuity starting date, you and your spouse must consent to a cash-out. Written consent is required for a cash-out if the present value of the annuity exceeds $5,000. Similar cash-out rules apply to a QPSA.