Retirement Topics - Qualified Joint and Survivor Annuity
A QJSA is when retirement benefits are paid as a life annuity (a series of payments, usually monthly, for life) to the participant and a survivor annuity over the life of the participant’s surviving spouse (or a former spouse, child or dependent who must be treated as a surviving spouse under a QDRO) following the participant’s death.
The amount paid to the surviving spouse must be no less than 50% and no greater than 100% of the amount of the annuity paid during the participant’s life. Alternatively, a participant who waives a QJSA may elect to have a qualified optional survivor annuity (QOSA). The amount paid to the surviving spouse under a QOSA is equal to the certain percentage (as chosen) of the amount of the annuity payable during the participant’s life.
The rules for survivor benefit payments to any designated beneficiary who is not the spouse are:
incidental benefit rule - the requirement that death and other nonretirement benefits payable under the plan be incidental to the primary purpose of the plan; and
A participant who gets married should immediately notify his or her employer and/or retirement plan administrator. A participant who gets divorced may be required to treat his or her former spouse as a current spouse under the terms of the divorce and pursuant to a QDRO. If a divorced participant wants to change the beneficiary of any survivor benefits not covered by a QDRO, he or she should contact the retirement plan administrator in order to designate a new beneficiary in accordance with the plan’s beneficiary designation procedures.
A qualified plan like a defined benefit plan, money purchase plan or target benefit plan must provide a QJSA to all married participants as the only form of benefit unless the participant and spouse, if applicable, consent in writing to another form of benefit payment. This consent can be submitted to the plan within 90-days of when annuity payments will begin. Plans must require a plan representative or notary witness the spouse’s consent. If the lump sum value of the participant’s benefit is $5,000 or less, the plan can pay a lump sum instead of a QJSA without obtaining either the participant’s or the spouse’s consent.
Some other types of qualified plans may be exempt from having to provide a QJSA if they:
require the plan’s death benefit be paid in full to the surviving spouse unless the spouse has consented to another beneficiary;
do not offer a life annuity option as a form of benefit under the plan; and
do not contain a direct transfer from another plan that was required to provide a survivor annuity.
If a retirement plan offers a QJSA, it must provide the participant with a QJSA notice.