QDRO Survivor & Death Benefits in QDROs 2 — Questions and Answers
Question 1: When a QDRO designates the alternate payee as a surviving annuitant, how is the participant's monthly retirement benefit typically affected?
- It is increased to cover the additional survivor benefit cost
- It is actuarially reduced to fund the future survivor benefit for the alternate payee (Correct answer)
- It is unaffected because the plan absorbs the survivor benefit cost
- It is paid in a lump sum to offset anticipated survivor costs
Correct answer: It is actuarially reduced to fund the future survivor benefit for the alternate payee
When a survivor annuity is provided under a QDRO, the participant's own monthly benefit is actuarially reduced to fund the contingent ongoing survivor benefit for the alternate payee.
Question 2: A 'pop-up' provision in a defined benefit plan means that:
- The participant's reduced benefit is restored to the full unreduced amount if the alternate payee predeceases the participant (Correct answer)
- Benefits are paid as an accelerated lump sum upon participant death
- The alternate payee receives enhanced monthly payments during retirement
- Benefits automatically convert to COLA-adjusted annuities at age 70½
Correct answer: The participant's reduced benefit is restored to the full unreduced amount if the alternate payee predeceases the participant
A 'pop-up' provision restores the participant's previously reduced benefit to the full unreduced amount if the designated surviving annuitant (alternate payee) predeceases the participant.
Question 3: Which IRC section governs the Qualified Pre-Retirement Survivor Annuity (QPSA) requirements for qualified pension plans?
- IRC Section 401(a)(11) (Correct answer)
- IRC Section 402(c)
- IRC Section 414(p)
- IRC Section 72(t)
Correct answer: IRC Section 401(a)(11)
IRC Section 401(a)(11) mandates that qualified pension plans provide a QPSA to the surviving spouse of a vested participant who dies before the annuity starting date.
Question 4: In a 401(k) plan QDRO where the alternate payee receives a separate account, what happens to that account upon the alternate payee's death?
- It must be paid as an annuity matching the participant's distribution form
- It passes to whomever the alternate payee has designated as beneficiary (Correct answer)
- It automatically reverts to the plan's general assets
- It is automatically paid to the original participant
Correct answer: It passes to whomever the alternate payee has designated as beneficiary
In defined contribution plans like 401(k)s, the alternate payee's separate account passes to whomever the alternate payee has designated as their own beneficiary, following standard beneficiary designation rules.
Question 5: What must a QDRO explicitly specify to ensure the alternate payee receives a pre-retirement survivor benefit in a defined benefit plan?
- The alternate payee's date of birth and Social Security number only
- A provision designating the alternate payee as the surviving spouse equivalent for survivor benefit purposes (Correct answer)
- The participant's expected retirement date and projected benefit amount
- The plan's actuarial assumptions and funding formula in detail
Correct answer: A provision designating the alternate payee as the surviving spouse equivalent for survivor benefit purposes
To secure pre-retirement survivor benefits, a QDRO must explicitly designate the alternate payee as the surviving spouse equivalent, which triggers QPSA-like protections for the alternate payee.
Question 6: Under ERISA Section 205, when may a plan participant waive the automatic Qualified Pre-Retirement Survivor Annuity?
- Only during a specific election period and with proper spousal consent (Correct answer)
- At any time by submitting a written waiver to the plan administrator
- Only after reaching the plan's normal retirement age
- Only if the plan has fewer than 25 participants
Correct answer: Only during a specific election period and with proper spousal consent
Under ERISA Section 205, a participant may waive the QPSA only during a specified election period and only with the written consent of the spouse, following required notice and election procedures.
Question 7: How can a QDRO affect the plan's obligation to provide a QJSA to the participant's subsequent (current) spouse?
- A QDRO cannot affect the current spouse's QJSA rights under any circumstances
- A QDRO can reduce or eliminate the current spouse's QJSA share by allocating survivor rights to the alternate payee (Correct answer)
- The current spouse always retains 50% QJSA rights regardless of any QDRO
- A QDRO automatically terminates all QJSA rights for any subsequent spouses
Correct answer: A QDRO can reduce or eliminate the current spouse's QJSA share by allocating survivor rights to the alternate payee
A properly drafted QDRO can allocate survivor annuity rights to the alternate payee, effectively reducing or eliminating the current (subsequent) spouse's entitlement to QJSA benefits.
QDRO Survivor & Death Benefits in QDROs 2
When a QDRO designates the alternate payee as a surviving annuitant, how is the participant's monthly retirement benefit typically affected?