[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.401(a)-20]

[Page 74-89]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.401(a)-20  Requirements of qualified joint and survivor annuity 
and qualified preretirement survivor annuity.

    Q-1: What are the survivor annuity requirements added to the Code by 
the Retirement Equity Act of 1984 (REA 1984)?
    A-1: REA 1984 replaced section 401(a)(11) with a new section 
401(a)(11) and added section 417. Plans to which new section 401(a)(11) 
applies must comply with the requirements of sections 401(a)(11) and 417 
in order to remain qualified under sections 401(a) or 403(a). In 
general, these plans must provide both a qualified joint and survivor 
annuity (QJSA) and a qualified preretirement survivor annuity (QPSA) to 
remain qualified. These survivor annuity requirements are applicable to 
any benefit payable under a plan, including a benefit payable to a 
participant under a contract purchased by the plan and paid by a third 
party.
    Q-2: Must annuity contracts purchased and distributed to a 
participant or spouse by a plan subject to the survivor annuity 
requirements of sections 401(a)(11) and 417 satisfy the requirements of 
those sections?
    A-2: Yes. Rights and benefits under section 401(a)(11) or 417 may 
not be eliminated or reduced because the plan uses annuity contracts to 
provide benefits merely because (a) such a contract is held by a 
participant or spouse instead of a plan trustee, or (b) such contracts 
are distributed upon plan termination. Thus, the requirements of 
sections 401(a)(11) and 417 apply to payments under the annuity 
contracts, not to the distributions of the contracts.
    Q-3: What plans are subject to the survivor annuity requirements of 
section 401(a)(11)?
    A-3: (a) Section 401(a)(11) applies to any defined benefit plan and 
to any defined contribution plan that is subject to the minimum funding 
standards of section 412. This section also applies to any participant 
under any other defined contribution plan unless all of the following 
conditions are satisfied--
    (1) The plan provides that the participant's nonforfeitable accrued 
benefit is payable in full, upon the participant's death, to the 
participant's surviving spouse (unless the participant elects,

[[Page 75]]

with spousal consent that satisfies the requirements of section 
417(a)(2), that such benefit be provided instead to a designated 
beneficiary);
    (2) The participant does not elect the payment of benefits in the 
form of a life annuity; and
    (3) With respect to the participant, the plan is not a transferee or 
an offset plan. (See Q&A 5 of this section.)
    (b) A defined contribution plan not subject to the minimum funding 
standards of section 412 will not be treated as satisfying the 
requirement of paragraph (a)(1) unless both of the following conditions 
are satisfied--
    (1) The benefit is available to the surviving spouse within a 
reasonable time after the participant's death. For this purpose, 
availability within the 90-day period following the date of death is 
deemed to be reasonable and the reasonableness of longer periods shall 
be determined based on the particular facts and circumstances. A time 
period longer than 90 days, however, is deemed unreasonable if it is 
less favorable to the surviving spouse than any time period under the 
plan that is applicable to other distributions. Thus, for example, the 
availability of a benefit to the surviving spouse would be unreasonable 
if the distribution was required to be made by the close of the plan 
year including the participant's death while distributions to employees 
who separate from service were required to be made within 90 days of 
separation.
    (2) The benefit payable to the surviving spouse is adjusted for 
gains or losses occurring after the participant's death in accordance 
with plan rules governing the adjustment of account balances for other 
plan distributions. Thus, for example, the plan may not provide for 
distributions of an account balance to a surviving spouse determined as 
of the last day of the quarter in which the participant's death occurred 
with no adjustments of an account balance for gains or losses after 
death if the plan provides for such adjustments for a participant who 
separates from service within a quarter.
    (c) For purposes of determining the extent to which section 
401(a)(11) applies to benefits under an employee stock ownership plan 
(as defined in section 4975(e)(7)), the portion of a participant's 
accrued benefit that is subject to section 409(h) is to be treated as 
though such benefit were provided under a defined contribution plan not 
subject to section 412.
    (d) The requirements set forth in section 401(a)(11) apply to other 
employee benefit plans that are covered by applicable provisions under 
Title I of the Employee Retirement Income Security Act of 1974. For 
purposes of applying the regulations under sections 401(a)(11) and 417, 
plans subject to ERISA section 205 are treated as if they were described 
in section 401(a). For example, to the extent that section 205 covers 
section 403(b) contracts and custodial accounts they are treated as 
section 401(a) plans. Individual retirement plans (IRAs), including IRAs 
to which contributions are made under simplified employee pensions 
described in section 408(k) and IRAs that are treated as plans subject 
to Title I, are not subject to these requirements.
    Q-4: What rules apply to a participant who elects a life annuity 
option under a defined contribution plan not subject to section 412?
    A-4: If a participant elects at any time (irrespective of the 
applicable election period defined in section 417(a)(6)) a life annuity 
option under a defined contribution plan not subject to section 412, the 
survivor annuity requirements of sections 401(a)(11) and 417 will always 
thereafter apply to all of the participant's benefits under such plan 
unless there is a separate accounting of the account balance subject to 
the election. A plan may allow a participant to elect an annuity option 
prior to the applicable election period described in section 417(a)(6). 
If a participant elects an annuity option, the plan must satisfy the 
applicable written explanation, consent, election, and withdrawal rules 
of section 417, including waiver of the QJSA within 90 days of the 
annuity starting date. If a participant selecting such an option dies, 
the surviving spouse must be able to receive the QPSA benefit described 
in section 417(c)(2) which is a life annuity, the actuarial equivalent 
of which is not less than 50 percent of the nonforfeitable account 
balance (adjusted for loans as described in Q&A 24(d) of this

[[Page 76]]

section). The remaining account balance may be paid to a designated 
nonspouse beneficiary.
    Q-5: How do sections 401(a)(11) and 417 apply to transferee plans 
which are defined contribution plans not subject to section 412?
    A-5: (a) Transferee plans. Although the survivor annuity 
requirements of sections 401(a)(11) and 417 generally do not apply to 
defined contribution plans not subject to section 412, such plans are 
subject to the survivor annuity requirements to the extent that they are 
transferee plans with respect to any participant. A defined contribution 
plan is a transferee plan with respect to any participant if the plan is 
a direct or indirect transferee of such participant's benefits held on 
or after January 1, 1985, by:
    (1) A defined benefit plan,
    (2) A defined contribution plan subject to section 412 or
    (3) A defined contribution plan that is subject to the survivor 
annuity requirements of sections 401(a)(11) and 417 with respect to that 
participant.

If through a merger, spinoff, or other transaction having the effect of 
a transfer, benefits subject to the survivor annuity requirements of 
sections 401(a)(11) and 417 are held under a plan that is not otherwise 
subject to such requirements, such benefits will be subject to the 
survivor annuity requirements even though they are held under such plan. 
Even if a plan satisfies the survivor annuity requirements, other rules 
apply to these transactions. See, e.g., section 411(d)(6) and the 
regulations thereunder. A transfer made before January 1, 1985, and any 
rollover contribution made at any time, are not transactions that 
subject the transferee plan to the survivor annuity requirements with 
respect to a participant. If a plan is a transferee plan with respect to 
a participant, the survivor annuity requirements do not apply with 
respect to other plan participants solely because of the transfer. Any 
plan that would not otherwise be subject to the survivor annuity 
requirements of sections 401(a)(11) and 417 whose benefits are used to 
offset benefits in a plan subject to such requirements is subject to the 
survivor annuity requirements with respect to those participants whose 
benefits are offset. Thus, if a stock bonus or profit-sharing plan 
offsets benefits under a defined benefit plan, such a plan is subject to 
the survivor annuity requirements.
    (b) Benefits covered. The survivor annuity requirements apply to all 
accrued benefits held for a participant with respect to whom the plan is 
a transferee plan unless there is an acceptable separate accounting 
between the transferred benefits and all other benefits under the plan. 
A separate accounting is not acceptable unless gains, losses, 
withdrawals, contributions, forfeitures, and other credits or charges 
are allocated on a reasonable and consistent basis between the accrued 
benefits subject to the survivor annuity requirements and other 
benefits. If there is an acceptable separate accounting between 
transferred benefits and any other benefits under the plan, only the 
transferred benefits are subject to the survivor annuity requirements.
    Q-6: Is a frozen or terminated plan required to satisfy the survivor 
annuity requirements of sections 401(a)(11) and 417?
    A-6: In general, benefits provided under a plan that is subject to 
the survivor annuity requirements of sections 401(a)(11) and 417 must be 
provided in accordance with those requirements even if the plan is 
frozen or terminated. However, any plan that has a termination date 
prior to September 17, 1985, and that distributed all remaining assets 
as soon as administratively feasible after the termination date, is not 
subject to the survivor annuity requirements. The date of termination is 
determined under section 411(d)(3) and Sec. 1.411(d)-2(c).
    Q-7: If the Pension Benefit Guaranty Corporation (PBGC) is 
administering a plan, are benefits payable in the form of a QPSA or 
QJSA-
    A-7: Yes, the PBGC will pay benefits in such forms.
    Q-8: How do the survivor annuity requirements of sections 401(a)(11) 
and 417 apply to participants?
    A-8: (a) If a participant dies before the annuity starting date with 
vested benefits attributable to employer or employee contributions (or 
both), benefits must be paid to the surviving

[[Page 77]]

spouse in the form of a QPSA. If a participant survives until the 
annuity starting date with vested benefits attributable to employer or 
employee contributions (or both), benefits must be provided to the 
participant in the form of a QJSA.
    (b) A participant may waive the QPSA or the QJSA (or both) if the 
applicable notice, election, and spousal consent requirements of section 
417 are satisfied.
    (c) Benefits are not required to be paid in the form of a QPSA or 
QJSA if at the time of death or distribution the participant was vested 
only in employee contributions and such death occurred, or distribution 
commenced, before October 22, 1986.
    (d) Certain mandatory distributions. A distribution may occur 
without satisfying the spousal consent requirements of section 417 (a) 
and (e) if the present value of the nonforfeitable benefit does not 
exceed the cash-out limit in effect underSec. 1.411(a)-11(c)(3)(ii). 
See Sec. 1.417(e)-1.
    Q-9: May separate portions of a participant's accrued benefit be 
subject to QPSA and QJSA requirements at any particular point in time?
    A-9: (a) Dual QPSA and QJSA rights. One portion of a participant's 
benefit may be subject to the QPSA and another portion to the QJSA 
requirements at the same time. For example, in order for a money 
purchase pension plan to distribute any portion of a married 
participant's benefit to the participant, the plan must distribute such 
portion in the form of a QJSA (unless the plan satisfies the applicable 
consent requirements of section 417 (a) and (e) with respect to such 
portion of the participant's benefit). This rule applies even if the 
distribution is merely an in-service distribution attributable to 
voluntary employee contributions and regardless of whether the 
participant has attained the normal retirement age under the plan. The 
QJSA requirements apply to such a distribution because the annuity 
starting date has occurred with respect to this portion of the 
participant's benefit. In the event of a participant's death following 
the commencement of a distribution in the form of a QJSA, the remaining 
payments must be made to the surviving spouse under the QJSA. In 
addition, the plan must satisfy the QPSA requirements with respect to 
any portion of the participant's benefits for which the annuity starting 
date had not yet occurred.
    (b) Example. Assume that participant A has a $100,000 account 
balance in a money purchase pension plan. A makes an in-service 
withdrawal of $20,000 attributable to voluntary employee contributions. 
The QJSA requirements apply to A's withdrawal of the $20,000. 
Accordingly, unless the QJSA form is properly waived such amount must be 
distributed in the form of a QJSA. A's remaining account balance 
($80,000) remains subject to the QPSA requirements because the annuity 
starting date has not occurred with respect to the $80,000. (If A 
survives until the annuity starting date, the $80,000 would be subject 
to the QJSA requirements.) If A died on the day following the annuity 
starting date for the withdrawal, A's spouse would be entitled to a QPSA 
with a value equal to at least $40,000 with respect to the $80,000 
account balance, in addition to any survivor benefit without respect to 
the $20,000. If the $20,000 payment to A had been the first payment of 
an annuity purchased with the entire $100,000 account balance rather 
than an in-service distribution, then the QJSA requirements would apply 
to the entire account balance at the time of the annuity starting date. 
In such event, the plan would have no obligation to provide A's spouse 
with a QPSA benefit upon A's death. Of course, A's spouse would receive 
the QJSA benefit (if the QJSA had not been waived) based on the full 
$100,000.
    Q-10: What is the relevance of the annuity starting date with 
respect to the survivor benefit requirements?
    A-10: (a) Relevance. The annuity starting date is relevant to 
whether benefits are payable as either a QJSA or QPSA, or other selected 
optional form of benefit. If a participant is alive on the annuity 
starting date, the benefits must be payable as a QJSA. If the 
participant is not alive on the annuity starting date, the surviving 
spouse must receive a QPSA. The annuity starting date is also used to 
determine when a spouse may consent to and a

[[Page 78]]

participant may waive a QJSA. A waiver is only effective if it is made 
90 days before the annuity starting date. Thus, a deferred annuity 
cannot be selected and a QJSA waived until 90 days before payments 
commence under the deferred annuity. In some cases, the annuity starting 
date will have occurred with respect to a portion of the participant's 
accrued benefit and will not have occurred with respect to the remaining 
portion. (See Q&A-9.)
    (b) Annuity starting date--(1) General rule. For purposes of 
sections 401(a)(11), 411(a)(11) and 417, the annuity starting date is 
the first day of the first period for which an amount is paid as an 
annuity or any other form.
    (2) Annuity payments. The annuity starting date is the first date 
for which an amount is paid, not the actual date of payment. Thus, if 
participant A is to receive annuity payments as of the first day of the 
first month after retirement but does not receive any payments until 
three months later, the annuity starting date is the first day of the 
first month. For example, if an annuity is to commence on January 1, 
January 1 is the annuity starting date even though the payment for 
January is not actually made until a later date. In the case of a 
deferred annuity, the annuity starting date is the date for which the 
annuity payments are to commence, not the date that the deferred annuity 
is elected or the date the deferred annuity contract is distributed.
    (3) Administrative delay. A payment shall not be considered to occur 
after the annuity starting date merely because actual payment is 
reasonably delayed for calculation of the benefit amount if all payments 
are actually made.
    (4) Forfeitures on death. Prior to the annuity starting date, 
section 411(a)(3)(A) allows a plan to provide for a forfeiture of a 
participant's benefit, except in the case of a QPSA or a spousal benefit 
described in section 401(a)(11)(B)(iii)(I). Once the annuity starting 
date has occurred, even if actual payment has not yet been made, a plan 
must pay the benefit in the distribution form elected.
    (5) Surviving spouses, alternate payees, etc. The definition of 
``annuity starting date'' for surviving spouses, other beneficiaries and 
alternate payees under section 414(p) is the same as it is for 
participants.
    (c) Disability auxiliary benefit--(1) General rule. The annuity 
starting date for a disability benefit is the first day of the first 
period for which the benefit becomes payable unless the disability 
benefit is an auxiliary benefit. The payment of any auxiliary disability 
benefits is disregarded in determining the annuity starting date. A 
disability benefit is an auxiliary benefit if upon attainment of early 
or normal retirement age, a participant receives a benefit that 
satisfies the accrual and vesting rules of section 411 without taking 
into account the disability benefit payments up to that date.

    Example. (i) Assume that participant A at age 45 is entitled to a 
vested accrued benefit of $100 per month commencing at age 65 in the 
form of a joint and survivor annuity under Plan X. If prior to age 65 A 
receives a disability benefit under Plan X and the payment of such 
benefit does not reduce the amount of A's retirement benefit of $100 per 
month commencing at age 65, any disability benefit payments made to A 
between ages 45 and 65 are auxiliary benefits. Thus, A's annuity 
starting date does not occur until A attains age 65. A's surviving 
spouse B would be entitled to receive a QPSA if A died before age 65. B 
would be entitled to receive the survivor portion of a QJSA (unless 
waived) if A died after age 65. The QPSA payable to B upon A's death 
prior to age 65 would be computed by reference to the QJSA that would 
have been payable to A and B had A survived to age 65.
    (ii) If in the above example A's benefit payable at age 65 is 
reduced to $99 per month because a disability benefit is provided to A 
prior to age 65, the disability benefit would not be an auxiliary 
benefit. The benefit of $99 per month payable to A at age 65 would not, 
without taking into account the disability benefit payments to A prior 
to age 65, satisfy the minimum vesting and accrual rules of section 411. 
Accordingly, the first day of the first period for which the disability 
payments are to be made to A would constitute A's annuity starting date, 
and any benefit paid to A would be required to be paid in the form of a 
QJSA (unless waived by A with the consent of B).

    (d) Other rules--(1) Suspension of benefits. If benefit payments are 
suspended after the annuity starting date pursuant to a suspension of 
benefits described in section 411(a)(3)(B) after an

[[Page 79]]

employee separates from service, the recommencement of benefit payments 
after the suspension is not treated as a new annuity starting date 
unless the plan provides otherwise. In such case, the plan administrator 
is not required to provide new notices nor to obtain new waivers for the 
recommenced distributions if the form of distribution is the same as the 
form that was appropriately selected prior to the suspension. If 
benefits are suspended for an employee who continues in service without 
a separation and who never receives payments, the commencement of 
payments after the period of suspension is treated as the annuity 
starting date unless the plan provides otherwise.
    (2) Additional accruals. In the case of an annuity starting date 
that occurs on or after normal retirement age, such date applies to any 
additional accruals after the annuity starting date, unless the plan 
provides otherwise. For example, if a participant who continues to 
accrue benefits elects to have benefits paid in an optional form at 
normal retirement age, the additional accruals must be paid in the 
optional form selected unless the plan provides otherwise. In the case 
of an annuity starting date that occurs prior to normal retirement age, 
such date does not apply to any additional accruals after such date.
    Q-11: Do the survivor annuity requirements apply to benefits derived 
from both employer and employee contributions?
    A-11: Yes. The survivor annuity benefit requirements apply to 
benefits derived from both employer and employee contributions. Benefits 
are not required to be paid in the form of a QPSA or a QJSA if the 
participant was vested only in employee contributions at the time of 
death or distribution and such death or distribution occurred before 
October 22, 1986. All benefits provided under a plan, including benefits 
attributable to rollover contributions, are subject to the survivor 
annuity requirements.
    Q-12: To what benefits do the survivor annuity requirements of 
sections 401(a)(11) and 417 apply?
    A-12: (a) Defined benefit plans. Under a defined benefit plan, 
sections 401(a)(11) and 417 apply only to benefits in which a 
participant was vested immediately prior to death. They do not apply to 
benefits to which a participant's beneficiary becomes entitled by reason 
of death or to the proceeds of a life insurance contract to the extent 
such proceeds exceed the present value of the participant's 
nonforfeitable benefits that existed immediately prior to death.
    (b) Defined contribution plans. Sections 401(a)(11) and 417 apply to 
all nonforfeitable benefits which are payable under a defined 
contribution plan, whether nonforfeitable before or upon death, 
including the proceeds of insurance contracts.
    Q-13: Does the rule of section 411(a)(3)(A) which permits 
forfeitures on account of death apply to a QPSA or the spousal benefit 
described in section 401(a)(11)(B)(iii)?
    A-13: No. Section 411(a)(3)(A) permits forfeiture on account of 
death prior to the time all the events fixing payment occur. However, 
this provision does not operate to deprive a surviving spouse of a QPSA 
or the spousal benefit described in section 401(a)(11)(B)(iii). 
Therefore, sections 401(a)(11) and 417 apply to benefits that were 
nonforfeitable immediately prior to death (determined without regard to 
section 411(a)(3)(A)). Thus, in the case of the death of a married 
participant in a defined contribution plan not subject to section 412 
which provides that, upon a participant's death, the entire 
nonforfeitable accrued benefit is payable to the participant's spouse, 
the nonforfeitable benefit is determined without regard to the 
provisions of section 411(a)(3)(A).
    Q-14: Do sections 411(a)(11), 401(a)(11) and 417 apply to 
accumulated deductible employee contributions, as defined in section 
72(o)(5)(B) (Accumulated DECs)?
    A-14: (a) Employee consent, section 411. The requirements of section 
411(a)(11) apply to Accumulated DECs. Thus, Accumulated DECs may not be 
distributed without participant consent unless the applicable exemptions 
apply.
    (b) Survior requirements. Accumulated DECs are treated as though 
held under a separate defined contribution plan that is not subject to 
section 412. Thus,

[[Page 80]]

section 401(a)(11) applies to Accumulated DECs only as provided in 
section 401(a)(11)(B)(iii). All Accumulated DECs are treated in this 
manner, including Accumulated DECs that are the only benefit held under 
a plan and Accumulated DECs that are part of a defined benefit or a 
defined contribution plan.
    (c) Effective date. Sections 401(a)(11) and 411(a)(11) shall not 
apply to distributions of accumulated DECs until the first plan year 
beginning after December 31, 1988.
    Q-15: How do the survivor annuity requirements of sections 
401(a)(11) and 417 apply to a defined benefit plan that includes an 
accrued benefit based upon a contribution to a separate account or 
mandatory employee contributions?
    A-15: (a) 414(k) plans. In the case of a section 414(k) plan that 
includes both a defined benefit plan and a separate account, the rules 
of sections 401(a)(11) and 417 apply separately to the defined benefit 
portion and the separate account portion of the plan. The separate 
account portion is subject to the survivor annuity requirements of 
sections 401(a)(11) and 417 and the special QPSA rules in section 
417(c)(2).
    (b) Employee contributions--(1) Voluntary. In the case of voluntary 
employee contributions to a defined benefit plan, the plan must maintain 
a separate account with respect to the voluntary employee contributions. 
This separate account is subject to the survivor annuity requirements of 
sections 401(a)(11) and 417 and the special QPSA rules in section 
417(c)(2).
    (2) Mandatory. In the case of a defined benefit plan providing for 
mandatory employee contributions, the entire accrued benefit is subject 
to the survivor annuity requirements of sections 401(a)(11) and 417 as a 
defined benefit plan.
    (c) Accumulated DECs. See Q&A 14 of this section for the rule 
applicable to accumulated deductible employee contributions.
    Q-16: Can a plan provide a benefit form more valuable than the QJSA 
and if a plan offers more than one annuity option satisfying the 
requirements of a QJSA, is spousal consent required when the participant 
chooses among the various forms?
    A-16: In the case of an unmarried participant, the QJSA may be less 
valuable than other optional forms of benefit payable under the plan. In 
the case of a married participant, the QJSA must be at least as valuable 
as any other optional form of benefit payable under the plan at the same 
time. Thus, if a plan has two joint and survivor annuities that would 
satisfy the requirements for a QJSA, but one has a greater actuarial 
value than the other, the more valuable joint and survivor annuity is 
the QJSA. If there are two or more actuarially equivalent joint and 
survivor annuities that satisfy the requirements for a QJSA, the plan 
must designate which one is the QJSA and, therefore, the automatic form 
of benefit payment. A plan, however, may allow a participant to elect 
out of such a QJSA, without spousal consent, in favor of another 
actuarially equivalent joint and survivor annuity that satisfies the 
QJSA conditions. Such an election is not subject to the requirement that 
it be made within the 90-day period before the annuity starting date. 
For example, if a plan designates a joint and 100% survivor annuity as 
the QJSA and also offers an actuarially equivalent joint and 50% 
survivor annuity that would satisfy the requirements of a QJSA, the 
participant may elect the joint and 50% survivor annuity without spousal 
consent. The participant, however, does need spousal consent to elect a 
joint and survivor annuity that was not actuarially equivalent to the 
automatic QJSA.
    Q-17: When must distributions to a participant under a QJSA 
commence?
    A-17: (a) QJSA benefits upon earliest retirement. A plan must permit 
a participant to receive a distribution in the form of a QJSA when the 
participant attains the earliest retirement age under the plan. Written 
consent of the participant is required. However, the consent of the 
participant's spouse is not required. Any payment not in the form of a 
QJSA is subject to spousal consent. For example, if the participant 
separates from service under a plan that allows for distributions on 
separation from service or if a plan allows for in-service 
distributions, the participant may receive a QJSA without spousal 
consent in such events.

[[Page 81]]

Payments in any other form, including a single sum, would require waiver 
of the QJSA by the participant's spouse.
    (b) Earliest retirement age. (1) This paragraph (b) defines the term 
``earliest retirement age'' for purposes of sections 401(a)(11), 
411(a)(11) and 417.
    (2) In the case of a plan that provides for voluntary distributions 
that commence upon the participant's separation from service, earliest 
retirement age is the earliest age at which a participant could separate 
from service and receive a distribution. Death of a participant is 
treated as a separation from service.
    (3) In the case of a plan that provides for in-service 
distributions, earliest retirement age is the earliest age at which such 
distributions may be made.
    (4) In the case of a plan not described in subparagraph (2) or (3) 
of this paragraph, the rule below applies. Earliest retirement age is 
the early retirement age determined under the plan, or if no early 
retirement age, the normal retirement age determined under the plan. If 
the participant dies or separates from service before such age, then 
only the participant's actual years of service at the time of the 
participant's separation from service or death are taken into account. 
Thus, in the case of a plan under which benefits are not payable until 
the attainment of age 65, or upon attainment of age 55 and completion of 
10 years of service, the earliest retirement age of a participant who 
died or separated from service with 8 years of service is when the 
participant would have attained age 65 (if the participant had 
survived). On the other hand, if a participant died or separated from 
service after 10 years of service, the earliest retirement age is when 
the participant would have attained age 55 (if the participant had 
survived).
    Q-18: What is a qualified preretirement survivor annuity (QPSA) in a 
defined benefit plan?
    A-18: A QPSA is an immediate annuity for the life of the surviving 
spouse of a participant. Each payment under a QPSA under a defined 
benefit plan is not to be less than the payment that would have been 
made to the survivor under the QJSA payable under the plan if (a) in the 
case of a participant who dies after attaining the earliest retirement 
age under the plan, the participant had retired with a QJSA on the day 
before the participant's death, and (b) in the case of a participant who 
dies on or before the participant's earliest retirement age under the 
plan, the participant had separated from service at the earlier of the 
actual time of separation or death, survived until the earliest 
retirement age, retired at that time with a QJSA, and died on the day 
thereafter. If the participant elects before the annuity starting date a 
form of joint and survivor annuity that satisfies the requirements for a 
QJSA and dies before the annuity starting date, the elected form is 
treated as the QJSA and the QPSA must be based on such form.
    Q-19: What rules apply in determining the amount and forfeitability 
of a QPSA?
    A-19: The QPSA is calculated as of the earliest retirement age if 
the participant dies before such time, or at death if the participant 
dies after the earliest retirement age. The plan must make reasonable 
actuarial adjustments to reflect a payment earlier or later than the 
earliest retirement age. A defined benefit plan may provide that the 
QPSA is forfeited if the spouse does not survive until the date 
prescribed under the plan for commencement of the QPSA (i.e., the 
earliest retirement age). Similarly, if the spouse survives past the 
participant's earliest retirement age (or other earlier QPSA 
distribution date under the plan) and elects after the death of the 
participant to defer the commencement of the QPSA to a later date, a 
defined benefit plan may provide for a forfeiture of the QPSA benefit if 
the spouse does not survive until the deferred commencement date. The 
account balance in a defined contribution plan may not be forfeited even 
though the spouse does not survive until the time the account balance is 
used to purchase the QPSA. See Q&A-17 of this section for the meaning of 
earliest retirement age.
    Q-20: What preretirement survivor annuity benefits must a defined 
contibution plan subject to the survivor annuity requirements of 
sections 401(a)(11) and 417 provide?

[[Page 82]]

    A-20: A defined contribution plan that is subject to the survivor 
annuity requirements of sections 401(a)(11) and 417 must provide a 
preretirement survivor annuity with a value which is not less than 50 
percent of the nonforfeitable account balance of the participant as of 
the date of the participant's death. If a contributory defined 
contribution plan has a forfeiture provision permitted by section 
411(a)(3)(A), not more than a proportional percent of the account 
balance attributable to contributions that may not be forfeited at death 
(for example, employee and section 401(k) contributions) may be used to 
satisfy the QPSA benefit. Thus, for example, if the QPSA benefit is to 
be provided from 50 percent of the account balance, not more than 50 
percent of the nonforfeitable contributions may be used for the QPSA.
    Q-21: May a defined benefit plan charge the participant for the cost 
of the QPSA benefit?
    A-21: Prior to the later of the time the plan allows the participant 
to waive the QPSA or provides notice of the ability to waive the QPSA, a 
defined benefit plan may not charge the participant for the cost of the 
QPSA by reducing the participant's plan benefits or by any other method. 
The preceding sentence does not apply to any charges prior to the first 
plan year beginning after December 31, 1988. Once the participant is 
given the opportunity to waive the QPSA or the notice of the QPSA is 
later, the plan may charge the participant for the cost of the QPSA. A 
charge for the QPSA that reasonably reflects the cost of providing the 
QPSA will not fail to satisfy section 411 even if it reduces the accrued 
benefit.
    Q-22: When must distributions to a surviving spouse under a QPSA 
commence?
    A-22: (a) In the case of a defined benefit plan, the plan must 
permit the surviving spouse to direct the commencement of payments under 
QPSA no later than the month in which the participant would have 
attained the earliest retirement age. However, a plan may permit the 
commencement of payments at an earlier date.
    (b) In the case of a defined contribution plan, the plan must permit 
the surviving spouse to direct the commencement of payments under the 
QPSA within a reasonable time after the participant's death.
    Q-23: Must a defined benefit plan obtain the consent of a 
participant and the participant's spouse to commence payments in the 
form of a QJSA in order to avoid violating section 415 or 411(b)?
    A-23: No. A defined benefit plan may commence distributions in the 
form of a QJSA without the consent of the participant and spouse, even 
if consent would otherwise be required (see Sec. 1.417(e)-1(b)), to the 
extent necessary to avoid a violation of section 415 or 411(b). For 
example, assume a plan has a normal retirement age of 55. A is a married 
participant, age 55, and has accrued a $75,000 joint and 100 percent 
survivor annuity that satisfies section 415. If an actuarial increase 
would be required under section 411 because of deferred commencement and 
the increase would cause the benefit to exceed the applicable limit 
under section 415, the plan may commence payment of a QJSA at age 55 
without the participant's election or consent and without the spouse's 
concent.
    Q-24: What are the rules under sections 401(a)(11) and 417 
applicable to plan loans?
    A-24: (a) Consent rules. (1) A plan does not satisfy the survivor 
annuity requirements of sections 401(a)(11) and 417 unless the plan 
provides that, at the time the participant's accrued benefit is used as 
security for a loan, spousal consent to such use is obtained. Consent is 
required even if the accrued benefit is not the primary security for the 
loan. No spousal consent is necessary if, at the time the loan is 
secured, no consent would be required for a distribution under section 
417(a)(2)(B). Spousal consent is not required if the plan or the 
participant is not subject to section 401(a)(11) at the time the accrued 
benefit is used as security, or if the total accrued benefit subject to 
the security is not in excess of the cash-out limit in effect under 
Sec. 1.411(a)-11(c)(3)(ii). The spousal consent must be obtained no 
earlier than the beginning of the 90-day period that ends on the date on 
which the loan is to be so secured. The consent is subject to the 
requirements of section 417(a)(2).

[[Page 83]]

Therefore, the consent must be in writing, must acknowledge the effect 
of the loan and must be witnessed by a plan representative or a notary 
public.
    (2) Participant consent is deemed obtained at the time the 
participant agrees to use his accrued benefit as security for a loan for 
purposes of satisfying the requirements for participant consent under 
sections 401(a)(11), 411(a)(11) and 417.
    (b) Change in status. If spousal consent is obtained or is not 
required under paragraph (a) of this Q&A 24 at the time the benefits are 
used as security, spousal consent is not required at the time of any 
setoff of the loan against the accrued benefit resulting from a default, 
even if the participant is married to a different spouse at the time of 
the setoff. Similarly, in the case of a participant who secured a loan 
while unmarried, no consent is required at the time of a setoff of the 
loan against the accrued benefit even if the participant is married at 
the time of the setoff.
    (c) Renegotiation. For purposes of obtaining any required spousal 
consent, any renegotiation, extension, renewal, or other revision of a 
loan shall be treated as a new loan made on the date of the 
renegotiation, extension, renewal, or other revision.
    (d) Effect on benefits. For purposes of determining the amount of a 
QPSA or QJSA, the accrued benefit of a participant shall be reduced by 
any security interest held by the plan by reason of a loan outstanding 
to the participant at the time of death or payment, if the security 
interest is treated as payment in satisfaction of the loan under the 
plan. A plan may offset any loan outstanding at the participant's death 
which is secured by the participant's account balance against the 
spousal benefit required to be paid under section 401(a)(11)(B)(iii).
    (e) Effective date. Loans made prior to August 19, 1985, are deemed 
to satisfy the consent requirements of paragraph (a) of this Q&A 24.
    Q-25: How do the survivor annuity requirements of sections 
401(a)(11) and 417 apply with respect to participants who are not 
married or to surviving spouses and participants who have a change in 
marital status?
    A-25: (a) Unmarried participant rule. Plans subject to the survivor 
annuity requirements of sections 401(a)(11) and 417 must satisfy those 
requirements applicable to QJSAs with respect to participants who are 
not married. A QJSA for a participant who is not married is an annuity 
for the life of the participant. Thus, an unmarried participant must be 
provided the written explanation described in section 417(a)(3)(A) and a 
single life annuity unless another form of benefit is elected by the 
participant. An unmarried participant is deemed to have waived the QPSA 
requirements. This deemed waiver is null and void if the participant 
later marries.
    (b) Marital status change.--(1) Remarriage. If a participant is 
married on the date of death, payments to a surviving spouse under a 
QPSA or QJSA must continue even if the surviving spouse remarries.
    (2) One-year rule. (i) A plan is not required to treat a participant 
as married unless the participant and the participant's spouse have been 
married throughout the one-year period ending on the earlier of (A) the 
participant's annuity starting date or (B) the date of the participant's 
death. Nevertheless, for purposes of the preceding sentence, a 
participant and the participant's spouse must be treated as married 
throughout the one-year period ending on the participant's annuity 
starting date even though they are married to each other for less than 
one year before the annuity starting date if they remain married to each 
other for at least one year. See section 417(d)(2). If a plan adopts the 
one-year rule provided in section 417(d), the plan must treat the 
participant and spouse who are married on the annuity starting date as 
married and must provide benefits which are to commence on the annuity 
starting date in the form of a QJSA unless the participant (with spousal 
consent) elects another form of benefit. The plan is not required to 
provide the participant with a new or retroactive election or the spouse 
with a new consent when the one-year period is satisfied. If the 
participant and the spouse do not remain married for at least one year, 
the plan may treat the participant as

[[Page 84]]

having not been married on the annuity starting date. In such event, the 
plan may provide that the spouse loses any survivor benefit right; 
further, no retroactive correction of the amount paid the participant is 
required.
    (ii) Example. Plan X provides that participants who are married on 
the annuity starting date for less than one year are treated as 
unmarried participants. Plan X provides benefits in the form of a QJSA 
or an optional single sum distribution. Participant A was married 6 
months prior to the annuity starting date. Plan X must treat A as 
married and must commence payments to A in the form of a QJSA unless 
another form of benefit is elected by A with spousal consent. If a QJSA 
is paid and A is divorced from his spouse S, within the first year of 
the marriage, S will no longer have any survivor rights under the 
annuity (unless a QDRO provides otherwise). If A continues to be married 
to S, and A dies within the one-year period, Plan X may treat A as 
unmarried and forfeit the OJSA benefit payable to S.
    (3) Divorce. If a participant divorces his spouse prior to the 
annuity starting date, any elections made while the participant was 
married to his former spouse remain valid, unless otherwise provided in 
a QDRO, or unless the participant changes them or is remarried. If a 
participant dies after the annuity starting date, the spouse to whom the 
participant was married on the annuity starting date is entitled to the 
QJSA protection under the plan. The spouse is entitled to this 
protection (unless waived and consented to by such spouse) even if the 
participant and spouse are not married on the date of the participant's 
death, except as provided in a QDRO.
    Q-26: In the case of a defined contribution plan not subject to 
section 412, does the requirement that a participant's nonforfeitable 
accrued benefit be payable in full to a surviving spouse apply to a 
spouse who has been married to the participant for less than one year?
    A-26: A plan may provide that a spouse who has not been married to a 
participant throughout the one-year period ending on the earlier of (a) 
the participant's annuity starting date or (b) the date of the 
participant's death is not treated as a surviving spouse and is not 
required to receive the participant's account balance. The special 
exception described in section 417(d)(2) and Q&A 25 of this section does 
not apply.
    Q-27: Are there circumstances when spousal consent to a 
participant's election to waive the QJSA or the QPSA is not required?
    A-27: Yes. If it is established to the satisfaction of a plan 
representative that there is no spouse or that the spouse cannot be 
located, spousal consent to waive the QJSA or the QPSA is not required. 
If the spouse is legally incompetnent to give consent, the spouse's 
legal guardian, even if the guardian is the participant, may give 
consent. Also, if the participant is legally separated or the 
participant has been abandoned (within the meaning of local law) and the 
participant has a court order to such effect, spousal consent is not 
required unless a QDRO provides otherwise. Similar rules apply to a plan 
subject to the requirements of section 401(a)(11)(B)(iii)(I).
    Q-28: Does consent contained in an antenuptial agreement or similar 
contract entered into prior to marriage satisfy the consent requirements 
of sections 401(a)(11) and 417?
    A-28: No. An agreement entered into prior to marriage does not 
satisfy the applicable consent requirements, even if the agreement is 
executed within the applicable election period.
    Q-29: If a participant's spouse consents under section 417(a)(2)(A) 
to the participant's waiver of a survivor annuity form of benefit, is a 
subsequent spouse of the same participant bound by the consent?
    A-29: No. A consent under section 417(a)(2)(A) by one spouse is 
binding only with respect to the consenting spouse. See Q&A-24 of this 
section for an exception in the case of plan benefits securing plan 
loans.
    Q-30: Does the spousal consent requirement of section 417(a)(2)(A) 
require that a spouse's consent be revocable?
    A-30: No. A plan may preclude a spouse from revoking consent once it 
has been given. Alternatively, a plan may also permit a spouse to revoke 
a

[[Page 85]]

consent after it has been given, and thereby to render ineffective the 
participant's prior election not to receive a QPSA or QJSA. A 
participant must always be allowed to change his election during the 
applicable election period. Spousal consent is required in such cases to 
the extent provided in Q&A 31, except that spousal consent is never 
required for a QJSA or QPSA.
    Q-31: What rules govern a participant's waiver of a QPSA or QJSA 
under section 417(a)(2)?
    A-31: (a) Specific beneficiary. Both the participant's waivers of a 
QPSA and QJSA and the spouse's consents thereto must state the specific 
nonspouse beneficiary (including any class of beneficiaries or any 
contingent beneficiaries) who will receive the benefit. Thus, for 
example, if spouse B consents to participant A's election to waive a 
QPSA, and to have any benefits payable upon A's death before the annuity 
starting date paid to A's children, A may not subsequently change 
beneficiaries without the consent of B (except if the change is back to 
a QPSA). If the designated beneficiary is a trust, A's spouse need only 
consent to the designation of the trust and need not consent to the 
designation of trust beneficiaries or any changes of trust 
beneficiaries.
    (b) Optional form of benefit--(1) QJSA. Both the participant's 
waiver of a QJSA (and any required spouse's consent thereto) must 
specify the particular optional form of benefit. The participant who has 
waived a QJSA with the spouse's consent in favor of another form of 
benefit may not subsequently change the optional form of benefit without 
obtaining the spouse's consent (except back to a QJSA). Of course, the 
participant may change the form of benefit if the plan so provides after 
the spouse's death or a divorce (other than as provided in a QDRO). A 
participant's waiver of a QJSA (and any required spouse's consent 
thereto) made prior to the first plan year beginning after December 31, 
1986, is not required to specify the optional form of benefit.
    (2) QPSA. A participant's waiver of a QPSA and the spouse's consent 
thereto are not required to specify the optional form of any 
preretirement benefit. Thus, a participant who waives the QPSA with 
spousal consent may subsequently change the form of the preretirement 
benefit, but not the nonspouse beneficiary, without obtaining the 
spouse's consent.
    (3) Change in form. After the participant's death, a beneficiary may 
change the optional form of survivor benefit as permitted by the plan.
    (c) General consent. In lieu of satisfying paragraphs (a) and (b) of 
this Q&A 31, a plan may permit a spouse to execute a general consent 
that satisfies the requirements of this paragraph (c). A general consent 
permits the participant to waive a QPSA or QJSA, and change the 
designated beneficary or the optional form of benefit payment without 
any requirement of further consent by such spouse. No general consent is 
valid unless the general consent acknowledges that the spouse has the 
right to limit consent to a specific beneficiary and a specific optional 
form of benefit, where applicable, and that the spouse voluntarily 
elects to relinquish both of such rights. Notwithstanding the previous 
sentence, a spouse may execute a general consent that is limited to 
certain beneficiaries or forms of benefit payment. In such case, 
paragraphs (a) and (b) of this Q&A 31 shall apply to the extent that the 
limited general consent is not applicable and this paragraph (c) shall 
apply to the extent that the limited general consent is applicable. A 
general consent, including a limited general consent, is not effective 
unless it is made during the applicable election period. A general 
consent executed prior to October 22, 1986 does not have to satisfy the 
specificity requirements of this Q&A 31.
    Q-32: What rules govern a participant's waiver of the spousal 
benefit under section 401(a)(11)(B)?
    A-32: (a) Application. In the case of a defined contribution plan 
that is not subject to the survivor annuity requirements of sections 
401(a)(11) and 417, a participant may waive the spousal benefit of 
section 401(a)(11)(B)(iii) if the conditions of paragraph (b) are 
satisfied. In general, a spousal benefit is the nonforfeitable account 
balance on the participant's date of death.

[[Page 86]]

    (b) Conditions. In general, the same conditions, other than the age 
35 requirement, that apply to the participant's waiver of a QPSA and the 
spouse's consent thereto apply to the participant's waiver of the 
spousal benefit and the spouse's consent thereto. See Q&A-31. Thus, the 
participant's waiver of the spousal benefit must state the specific 
nonspouse beneficiary who will receive such benefit. The waiver is not 
required to specify the optional form of benefit. The participant may 
change the optional form of benefit, but not the nonspouse beneficiary, 
without obtaining the spouse's consent.
    Q-33: When and in what manner, may a participant waive a spousal 
benefit or a QPSA?
    A-33: (a) Plans not subject to section 401(a)(11). A participant in 
a plan that is not subject to the survivor annuity requirements of 
section 401(a)(11) (because of subparagraph (B)(iii) thereof) may waive 
the spousal benefit at any time, provided that no such waiver shall be 
effective unless the spouse has consented to the waiver. The spouse may 
consent to a waiver of the spousal benefit at any time, even prior to 
the participant's attaining age 35. No spousal consent is required for a 
payment to the participant or the use of the accrued benefit as security 
for a plan loan to the participant.
    (b) Plans subject to section 401(a)(11). A participant in a plan 
subject to the survivor annuity requirements of section 401(a)(11) 
generally may waive the QPSA benefit (with spousal consent) only on or 
after the first day of the plan year in which the participant attains 
age 35. However, a plan may provide for an earlier waiver (with spousal 
consent), provided that a written explanation of the QPSA is given to 
the participant and such waiver becomes invalid upon the beginning of 
the plan year in which the participant's 35th birthday occurs. If there 
is no new waiver after such date, the participant's spouse must receive 
the QPSA benefit upon the participant's death.
    Q-34: Must the written explanations required by section 417(a)(3) be 
provided to nonvested participants?
    A-34: Such written explantions must be provided to nonvested 
participants who are employed by an employer maintaining the plan. Thus, 
they are not required to be provided to those nonvested participants who 
are no longer employed by such an employer.
    Q-35: When must a plan provide the written explanation, required by 
section 417(a)(3)(B), of the QPSA to a participant?
    A-35: (a) General rule. A plan must provide the written explanation 
of the QPSA to a participant within the applicable period. Except as 
provided in paragraph (b), the applicable period means, with respect to 
a participant, whichever of the following periods ends last:
    (1) The period beginning with the first day of the plan year in 
which the participant attains age 32 and ending with the close of the 
plan year preceding the plan year in which the participant attains age 
35.
    (2) A reasonable period ending after the individual becomes a 
participant.
    (3) A reasonable period ending after the QPSA is no longer fully 
subsidized.
    (4) A reasonable period ending after section 401(a)(11) first 
applies to the participant. Section 401(a)(11) would first apply when a 
benefit is transferred from a plan not subject to the survivor annuity 
requirements of section 401(a)(11) to a plan subject to such section or 
at the time of an election of an annuity under a defined contribution 
plan described in section 401(a)(11)(B)(iii).
    (b) Pre-35 separations. In the case of a participant who separates 
from service before attaining age 35, the applicable period means the 
period beginning one year before the separation from service and ending 
one year after such separation. If such a participant returns to 
service, the plan must also comply with pragraph (a).
    (c) Reasonable period. For purposes of applying paragraph (a), a 
reasonable period ending after the enumerated events described in 
paragraphs (a) (2), (3) and (4) is the end of the one-year period 
beginning with the date the applicable event occurs. The applicable 
period for such events begins one year prior to the occurrence of the 
enumerated events.
    (d) Transition rule. In the case of an individual who was a 
participant in the

[[Page 87]]

plan on August 23, 1984, and, as of that date had attained age 34, the 
plan will satisfy the requriement of section 417(a)(3)(B) if it provided 
the explanation not later than December 31, 1985.
    Q-36: How do plans satisfy the requirements of providing 
participants explanations of QPSAs and QJSAs?
    A-36. For rules regarding the explanation of QPSAs and QJSAs 
required under section 417(a)(3), see Sec. 1.417(a)(3)-1.
    Q-37: What are the consequences of fully subsidizing the cost of 
either a QJSA or a QPSA in accordance with section 417(a)(5)?
    A-37: If a plan fully subsidizes a QJSA or QPSA in accordance with 
section 417(a)(5) and does not allow a participant to waive such QJSA or 
QPSA or to select a nonspouse beneficiary, the plan is not required to 
provide the written explanation required by section 417(a)(3). However, 
if the plan offers an election to waive the benefit or designate a 
beneficiary, it must satisfy the election, consent, and notice 
requirements of section 417(a) (1), (2), and (3), with respect to such 
subsidized QJSA or QPSA, in accordance with section 417(a)(5).
    Q-38: What is a fully subsidized benefit?
    A-38: (a) QJSA--(1) General rule. A fully subsidized QJSA is one 
under which no increase in cost to, or decrease in actual amounts 
received by, the participant may result from the participant's failure 
to elect another form of benefit.
    (2) Examples.

    Example (1) . If a plan provides a joint and survivor annuity and a 
single sum option, the plan does not fully subsidize the joint and 
survivor annuity, regardless of the actuarial value of the joint and 
survivor annuity because, in the event of the participant's early death, 
the participant would have received less under the annuity than he would 
have received under the single sum option.
    Example (2) . If a plan provides for a life annuity of $100 per 
month and a joint and 100% survivor benefit of $99 per month, the plan 
does not fully subsidize the joint and survivor benefit.

    (b) QPSA. A QPSA is fully subsidized if the amount of the 
participant's benefit is not reduced because of the QPSA coverage and if 
no charge to the participant under the plan is made for the coverage. 
Thus, a QPSA is fully subsidized in a defined contribution plan.
    Q-39: When do the survivor annuity requirements of sections 
401(a)(11) and 417 apply to plans?
    A-39: Sections 401(a)(11) and 417 generally apply to plan years 
beginning after December 31, 1984. Sections 302 and 303 of REA 1984 
provide specific effective dates and transitional rules under which the 
QJSA or QPSA (or pre-REA 1984 section 401(a)(11)) requirements may be 
applicable to particular plans or with respect to benefits provided to 
(as amended by REA 1984) particular participants. In general, the 
section 401(a)(11) (as amended by REA 1984) survivor annuity 
requirements do not apply with respect to a participant who does not 
have at least one hour of service or one hour of paid leave under the 
plan after August 22, 1984.
    Q-40: Are there special effective dates for plans maintained 
pursuant to collective bargaining agreements?
    A-40: Yes. Section 302(b) of REA 1984 as amended by section 1898(g) 
of the Tax Reform Act of 1986 provides a special deferred effective date 
for such plans. Whether a plan is described in section 302(b) of REA 
1984 is determined under the principles applied under section 1017(c) of 
the Employee Retirement Income Security Act of 1974. See H.R. Rep. No. 
1280, 93d Cong., 2d Sess. 266 (1974). In addition, a plan will not be 
treated as maintained under a collective bargaining agreement unless the 
employee representatives satisfy section 7701(a)(46) of the Internal 
Revenue Code after March 31, 1984. See Sec. 301.7701-17T for other 
requirements for a plan to be considered to be collectively bargained. 
Nothing in section 302(b) of REA 1984 denies a participant or spouse the 
rights set forth in sections 303(c)(2), 303(c)(3), 303(e)(1), and 
303(e)(2) of REA 1984.
    Q-41: What is one hour of service or paid leave under the plan for 
purposes of the transition rules in section 303 of REA 1984?
    A-41: One hour of service or paid leave under the plan is one hour 
of service or paid leave recognized or required to be recognized under 
the plan for any purpose, e.g., participation, vesting percentage, or 
benefit accrual

[[Page 88]]

purposes. For plans that do not compute hours of service, one hour of 
service or paid leave means any service or paid leave recognized or 
required to be recognized under the plan for any purpose.
    Q-42: Must a plan be amended to provide for the QPSA required by 
section 303(c)(2) of REA 1984, or for the survivor annuities required by 
section 303(e) of REA 1984?
    A-42: A plan will not fail to satisfy the qualification requirements 
of section 401(a) or 403(a) merely because it is not amended to provide 
the QPSA required by section 303(c)(2) or the survivor annuities 
required by section 303(e). The plan must, however, satisfy those 
requirements in operation.
    Q-43: Is a participant's election, or a spouse's consent to an 
election, with respect to a QPSA, made before August 23, 1984, valid?
    A-43: No.
    Q-44: Is spousal consent required for certain survivor annuity 
elections made by the participant after December 31, 1984, and before 
the first plan year to which new sections 401(a)(11) and 417 apply?
    A-44: Yes. Section 303(c)(3) of REA 1984 provides that any election 
not to take a QJSA made after December 31, 1984, and before the date 
sections 401(a)(11) and 417 apply to the plan by a participant who has 1 
hour of service or leave under the plan after August 23, 1984, is not 
effective unless the spousal consent requirements of section 417 are met 
with respect to such election. Unless the participant's annuity starting 
date occurred before January 1, 1985, the spousal consent required by 
section 417 (a)(2) and (e) must be obtained even though the participant 
elected the benefit prior to January 1, 1985. The plan is not required 
to be amended to comply with section 303(c)(3) of REA 1984, but the plan 
must satisfy this requirement in operation.
    Q-45: Are there special rules for certain participants who separated 
from service prior to August 23, 1984?
    A-45: Yes. Section 303(e) of REA 1984 provides special rules for 
certain participants who separated from service before August 23, 1984. 
Section 303(e)(1), which applies only to plans subject to section 
401(a)(11) of the Code (as in effect on August 22, 1984), provides that 
participants whose annuity starting date did not occur before August 24, 
1984, and who had one hour of service on or after September 2, 1974, but 
not in a plan year beginning after December 31, 1975, may elect to 
receive the benefits required to be provided under section 401(a)(11) of 
the Code (as in effect on August 22, 1984). Section 303(e)(2) provides 
that certain participants who had one hour of service in a plan year 
beginning on or after January 1, 1976, but not after August 22, 1984, 
may elect QPSA coverage under new sections 401(a)(11) and 417 in plans 
subject to these provisions. Section 303(e)(4)(A) requires plans or plan 
administrators to notify those participants of the provisions of section 
303(e).
    Q-46: When must a plan provide the notice required by section 
303(e)(4)(A) of REA 1984?
    A-46: The notice required by section 303(e)(4)(A) must be provided 
no later than the earlier of:
    (a) The date the first summary annual report provided after 
September 17, 1985, is distributed to participants; or
    (b) September 30, 1985.

A plan will not fail to satisfy the preceding sentence if the plan 
provides a fully subsidized QPSA with respect to any participant 
described in section 303(e) who dies on or after July 19, 1985, and 
before the notice is received. If the plan ceases to fully subsidize the 
QPSA, the cessation must not be effective until the notice is given. For 
this purpose, an annuity payable to a nonspouse beneficiary elected by 
the participant, in lieu of a spouse, shall satisfy the QPSA 
requirement, so long as the survivor benefit is fully subsidized. The 
notice required by this paragraph must be in writing and sent to the 
participant's last known address.
    Q-47: Is there another time when plans must provide notice of the 
right, described in section 303(e)(1) of REA '84, to elect a pre-REA 
1984 qualified joint and survivor annuity?
    A-47: Yes. Notice of this right must also be provided to a 
participant at the

[[Page 89]]

time the participant applies for benefit payments.

[53 FR 31842, Aug. 22, 1988; 53 FR 48534, Dec. 1, 1988, as amended by 
T.D. 8794, 63 FR 70338, Dec. 21, 1998; T.D. 8891, 65 FR 44682, July 19, 
2000; T.D. 9099, 68 FR 70144, Dec. 17, 2003]