3777. When may survivor benefits required under a qualified plan be waived?Nuco Employeercline212010-08-31T21:53:00Z2014-08-17T14:20:00Z2014-08-17T14:20:00Z410936232Summit Business Media5114731114QJSA QPSA qualified joint survivor annuity preretirement spousal waiver consent2005-01-19T00:00:00ZTaxFactsDefaultArticleSite Map/Retirement Plans/Pension And Profit Sharing/Qualification/Distribution/Automatic Survivor Benefit116000338-00-tf1.xml340.00;#2258;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1Under what circumstances may survivor benefits required under a qualified plan be waived?124900.000000000TaxFactsDefaultArticle2010-01-15T00:54:30ZSBMEDIA\moss-admin3777. When may survivor benefits required under a qualified plan be waived?A qualified plan that is subject to the automatic survivor benefit rules generally must provide that participants may elect (or revoke an election) to waive the qualified joint and survivor annuity (QJSA) or the qualified preretirement survivor annuity (QPSA) forms of benefit (Q 3769) at any time during the applicable election period.IRC Sec. 417(a)(1)(a). The participant may elect the qualified optional survivor annuity (QOSA) at any time during the applicable election period.See IRC Sec. 417(a)(1)(a). The plan also must provide that such an election will not be effective unless (1) the spouse of the participant, if any, consents in writing to the election, (2) the election designates a beneficiary or a form of benefits that may not be changed without spousal consent (unless the consent expressly permits future designations by the participant without further spousal consent), and (3) the consent acknowledges the effect of the election and is witnessed by a plan representative or notary public.IRC Sec. 417(a)(2); Treas. Reg. §1.401(a)-20, A-31.An election made without the consent of the spouse is effective only if it is established to the satisfaction of a plan representative that there is no spouse, that the spouse cannot be located, or that certain other specified circumstances prevent securing such consent.See Treas. Reg. §1.401(a)-20, A-27. Caution should be exercised when following any of these exceptions as a missing spouse who suddenly resurfaces may be entitled to benefits that already have been fully paid to another beneficiary. Any consent by the spouse of a participant, or proof that consent cannot be obtained from the spouse, is effective only with respect to that spouse except in the case of plan benefits securing a loan (Q 3769).IRC Sec. 417(a)(2); Treas. Reg. §1.401(a)-20, A-29.A spousal waiver that had not been properly witnessed or notarized was struck down despite the wife’s acknowledgement that she had signed the form because the waiver did not meet the requirements clearly set forth in the IRC and ERISA.See Lasche v. George W. Lasche Basic Profit Sharing Plan, 111 F.3d 863 (11th Cir. 1997). In an earlier district court ruling, the lack of a written, notarized spousal consent did not render the designation of a non-spouse beneficiary completely ineffective; the designation remained effective to the extent the benefits exceeded what was required to be paid to the spouse.Profit Sharing Plan for Employees of Republic Fin. Services, Inc. v. MBank Dallas, N.A., 683 F. Supp. 592 (N.D. Tex. 1988). But see United Parcel Service, Inc. v. Riley, 532 N.Y.S.2d 473 (1988). In another case, the Seventh Circuit held that where the husband was also the plan representative, his wife’s consent was valid even though he did not witness it on behalf of the plan, because he knew the person who signed it was his wife.Burns v. Orthotek, Inc. Employees’ Pension Plan & Trust, 657 F.3d 571 (7th Cir. 2011).Prior consent to waive a benefit is not invalid simply because the benefit increased after the consent was given.Kifafi v. Hilton Hotels Ret. Plan, 826 F. Supp. 2d 25 (D.D.C. 2011).A prenuptial agreement or similar contract entered into prior to marriage is not, by itself, effective to waive a widow’s surviving spouse benefits,Treas. Reg. §1.401(a)-20, A-28; Hurwitz v. Sher, 982 F.2d 778 (2d Cir. 1992), cert. denied, 113 S.Ct. 2345; Nellis v. Boeing, 1992 U.S. Dist. Lexis 8510 (D.C. Kan. 1992). based on parallel provisions found in ERISA Section 205(c) and IRC Section 417(a).See also, Pedro Enter., Inc. v. Perdue, 998 F.2d 491 (7th Cir. 1993). For a valid waiver to occur, ERISA requires a notarized waiver containing specific language by a spouse who actually is entitled, by marriage, to the statutory benefits being waived. In addition, the spouse executing the waiver must designate an alternative beneficiary.See Hagwood v. Newton, 282 F.3d 285 (4th Cir. 2002).The Court of Appeals for the Eighth Circuit held that neither a prenuptial agreement with a participant’s second wife, nor a separation agreement in which his first wife had “relinquished any right, title or interest in and to any pension plans,” constituted a valid waiver; thus, the court divided the benefit equally between them on his death.National Auto. Dealers and Assoc. Retirement Trust v. Arbeitman, 89 F.3d 496 (8th Cir. 1996). The Court of Appeals for the Fourth Circuit found that a valid waiver was executed where the separation agreement specified the plan in which the interest was waived, even though the ex-spouse was still named as beneficiary.Estate of Altobelli v. IBM, 77 F.3d 78 (4th Cir. 1996), overruled in part by Kennedy v. Plan Administrator for DuPont Savings & Inv. Plan, 555 U.S. 285 (2009).A plan is not required to permit a waiver of the QJSA or QPSA form of benefit if it fully subsidizes the cost of such benefit and does not permit a participant to waive the benefit or designate another beneficiary. A plan fully subsidizes the cost of a benefit if the failure to waive the benefit would not result in a decrease of any plan benefits to the waiving participant and would not result in increased contributions from that participant.IRC Sec. 417(a)(5).Applicable Election PeriodWith respect to the QJSA form of benefit, the applicable election period is the 180 day period ending on the annuity starting date (the ninety day period, in the case of plan years beginning before 2007).See IRC Sec. 417(a)(6)(A). The plan generally may not commence the distribution of any portion of a participant’s accrued benefit to which these requirements apply unless the applicable consent requirements are satisfied.Treas. Reg. §1.417(e)-1(b)(1).A plan must provide participants with written notice of the QJSA requirement no less than thirty days and no more than 180 days (ninety days for plan years prior to 2007) before the annuity starting date.See Treas. Reg. §1.417(e)-1(b)(3); IRC Sec 417(a)(6)(A). If a participant, after receiving the written explanation of the QJSA, affirmatively elects a form of distribution with spousal consent, the plan will not fail to satisfy the requirements of IRC Section 417(a) merely because the annuity starting date is less than thirty days after the written explanation was provided to the participant, provided four requirements are met: (1)the plan administrator must provide information to the participant clearly indicating that the participant has a right to at least thirty days to consider whether to waive the QJSA and consent to another form of distribution; (2)the participant must be permitted to revoke an affirmative distribution election at least until the annuity starting date, or, if later, at any time prior to the expiration of the seven day period that begins the day the explanation of the QJSA is provided to the participant; (3)the annuity starting date must be after the date the explanation of the QJSA is provided, except as provided in IRC Section 417(a)(7) (Q 3769); and (4)distribution in accordance with the affirmative election must not begin before the expiration of the seven day period that begins the day the explanation of the QJSA is provided to the participant.Treas. Reg. §1.417(e)-1(b)(3)(ii).With respect to the QPSA form of benefit, the applicable election period begins on the first day of the plan year in which the participant attains age thirty-five and ends on the date of his or her death. Where a participant has separated from service with the employer, the election period with respect to previously accrued benefits may begin no later than the date of separation.IRC Sec. 417(a)(6)(B).The applicable election period may not end before the thirtieth day after the plan provides the explanation required under IRC Section 417(a)(3).See Treas. Reg. §1.417(e)-1(b)(3)(ii). Under that rule, a plan generally must, within certain specified periods, provide each participant (vested and non-vested, married or unmarried) with a written explanation of the automatic survivor annuity forms of benefit and of the participant’s (and his or her spouse’s) rights with respect to waiving the benefits (Q 3769).