§35.06 Survivorship Protection for The Alternate Payee

• Jurisdiction: Washington

§ 35.06 SURVIVORSHIP PROTECTION FOR THE ALTERNATE PAYEE

The terms of the plan and the QDRO will determine whether the alternate payee will receive benefits or continue to receive benefits if the participant predeceases the alternate payee.

[1] Methods of Providing Survivorship Protection

The alternate payee may be provided with survivorship protection (1) by a separate-interest QDRO (that specifically provides that the death of the participant will have no effect on the alternate payee's assigned benefit), and/or (2) by treating the alternate payee as the "surviving spouse" under the survivorship rules of the Code and ERISA.

Practice Tip: To be clear regarding survivorship rights, if a separate-interest QDRO is used, it would be prudent to set forth the survivorship rights with respect to the alternate payee's portion and to specify that the alternate payee does not have survivorship rights with respect to the participant's portion. See also § 35.07[1][b], below.

[2] Definitions

The following terms are frequently used in connection with the survivorship rules.

[a] Qualified Joint and Survivor Annuity (QJSA)

For plans subject to the survivorship rules (e.g., all defined benefit plans and certain defined contribution plans), the normal retirement benefit, if the participant is married throughout the one-year period ending on the participant's annuity starting date, is a qualified joint and survivor annuity (QJSA). If the participant is single, the normal form of benefit is a single life annuity. A QJSA is the actuarial equivalent of a single life annuity. If this basic benefit is waived by the participant and the waiver is consented to by the spouse, then another form of benefit offered by the plan may be elected (e.g., lump-sum distribution). A QJSA must provide a benefit to the participant each year (usually paid in monthly installments) and, on the death of the participant, a survivor annuity to the participant's spouse. The survivor annuity may range anywhere from 50 percent to 100 percent of the participant's benefit. I.R.C. §§ 411(a)(11), 417; 29 U.S.C. § 1055; Treas. Reg. 1.401(a)-20, Q-20, A-20.

Comment: The one-year marriage rule is not mandatory. Also, the one-year marriage rule does not have to apply to both the QJSA and QPSA. It may apply to just one, more often the QPSA. See § 35.06[2][c] and [4], below.

[b] Qualified Preretirement Survivor Annuity (QPSA)

All defined benefit plans and certain defined contribution plans must pay a survivor annuity to a surviving spouse if the participant dies prior to the annuity starting date. This benefit is referred to as a qualified preretirement survivor annuity (QPSA) and is based on the participant's vested accrued benefit under the plan at the time of death. I.R.C. § 417(b)(2); 29 U.S.C. § 1055(e).

[c] Surviving Spouse

The participant's spouse is determined as of the earlier of the annuity starting date or the participant's death. A special one-year marriage rule may apply that requires that the participant and spouse be married for at least one year before the earlier of the annuity starting date or the participant's death. Treas. Reg. § 1.401(a)-20, Q & A 25(b).

[d] Annuity Starting Date

The "annuity starting date" is the first day of the first period for which an amount is payable to...