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Retirement Topics - Qualified Pre-Retirement Survivor Annuity (QPSA)

A QPSA is a form of a death benefit paid as a life annuity (a series of payments, usually monthly, for life) to the surviving spouse (or a former spouse, child or dependent who must be treated as a surviving spouse under a QDRO) of a participant who:

  1. was vested in his or her retirement plan benefits;
  2. died before retirement; and
  3. was married to the surviving spouse (for at least one year if the plan so provides) (or to a former spouse named in a QDRO).

The rules that apply to survivor benefit payments to any designated beneficiary who is not the spouse are:

  • incidental benefit rule - the requirement that death and other nonretirement benefits paid by the plan be incidental to the primary purpose of the plan; and
  • minimum distribution requirements – payment of survivor benefits to a non-spouse beneficiary be under the 5-year rule or the life expectancy rule.

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 QPSA to all married participants unless the participant and spouse consent in writing to waive the QPSA. This consent can be provided to the plan at any time after the participant becomes eligible to participate in the plan up the date of the participant’s death. 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 QPSA without obtaining either the participant’s or the spouse’s consent.

Some types of qualified plans may be exempt from having to provide a QPSA if they:

  1. are defined contribution plans (other than a money purchase or target benefit plans);
  2. require the plan’s death benefit be paid in full to the surviving spouse unless the spouse has consented to another beneficiary;
  3. do not offer a life annuity option as a form of benefit under the plan; and
  4. do not contain a direct transfer from another plan, which was required to provide a survivor annuity.

If a retirement plan offers a QPSA, it must give a participant a QPSA notice during the period beginning when he or she is age 32 and ending with the close of the plan year before the participant is age 35,or within one year from when an employee becomes a plan participant if he or she is hired after age 35.

Additional resources:

Publication 504, Divorced or Separated Individuals