26 U.S.C. § 417 — Definitions and special rules for purposes of minimum survivor annuity requirements
submitted 42 years ago by Pub. L. 98-397 to r/title-26-INTERNAL-REVENUE-CODE · 2,766 words · no verdicts yet
This section sets rules for retirement plans that pay married workers a "qualified joint and survivor annuity." A worker can waive that annuity only if their spouse consents in writing. The section also defines the annuity types, sets consent deadlines, and limits cash-outs without spousal consent.
(a) Election to waive qualified joint and survivor annuity or qualified preretirement survivor annuity
(1) In general: A plan only satisfies section 401(a)(11) if each participant can, at any time during the "applicable election period," waive the qualified joint and survivor annuity or the qualified preretirement survivor annuity, or both. If the participant waives it, they may also elect the "qualified optional survivor annuity" during that same period. The participant may revoke any of these elections at any time during the period. The plan must also follow paragraphs (2), (3), and (4).
(2) Spouse must consent to election: A waiver under (1)(A)(i) only counts if the participant's spouse consents in writing. The consent must name a beneficiary or benefit form that cannot be changed without further spousal consent, unless the spouse's consent specifically allows the participant to make changes without asking again. The consent must acknowledge what the waiver means and be witnessed by a plan representative or notary. Instead of spousal consent, the plan may accept proof — satisfactory to a plan representative — that there is no spouse, the spouse cannot be located, or another circumstance set by the Secretary's regulations applies. Any consent given, or excuse from consent, applies only to that one spouse.
(3) Plan must give written explanations:
(A) Explanation of joint and survivor annuity: Within a reasonable time before the annuity starting date, set by regulation, the plan must give each participant a written explanation of the terms of the qualified joint and survivor annuity and the qualified optional survivor annuity; the participant's right to waive the joint and survivor annuity and what that waiver means; the spouse's rights under (2); and the right to revoke a waiver and what that means.
(B) Explanation of qualified preretirement survivor annuity: (i) The plan must give a comparable written explanation about the preretirement survivor annuity within the "applicable period." (ii) That period is whichever of these ends latest: the period from the start of the plan year the participant turns 32 through the end of the plan year before they turn 35; a reasonable period after the person becomes a participant; a reasonable period after paragraph (5)'s full-subsidy exception stops applying to the participant; or a reasonable period after section 401(a)(11) starts applying to the participant. If the participant leaves the job before turning 35, the applicable period is a reasonable time after they leave.
(4) Spousal consent required to use plan benefits as loan security: If section 401(a)(11) applies to a participant and the plan will use part or all of the participant's accrued benefit as loan security, the plan cannot do so unless the participant's spouse, if any, consents in writing within the 90 days before the loan is secured, and the consent meets requirements like those in paragraph (2).
(5) Special rule when the plan pays the full cost: (A) These requirements do not apply to the joint and survivor annuity or preretirement survivor annuity if the benefit cannot be waived or given to another beneficiary, and the plan fully subsidizes its cost. (B) The plan "fully subsidizes" the cost if a participant who does not waive the benefit gets no smaller benefit and pays no higher contribution because of it.
(6) "Applicable election period" defined: For waiving the joint and survivor annuity, it is the 180 days ending on the annuity starting date. For waiving the preretirement survivor annuity, it starts on the first day of the plan year the participant turns 35 and ends on the participant's death. If the participant already left the job, the period for benefits earned before leaving cannot start later than the date they left.
(7) Special timing rules for the written explanation: (A) The plan may give the explanation after the annuity starting date. If it does, the election period cannot end before 30 days after the explanation is given. The Secretary* may limit this by regulation, but cannot limit how early the annuity starting date may come before the explanation, except by requiring that the annuity starting date not be earlier than when employment ends. (B) The plan may let a participant — with any needed spousal consent — waive the requirement that the explanation come at least 30 days before the annuity starting date, as long as payments start more than 7 days after the explanation is given.
(b) Definition of qualified joint and survivor annuity: This is an annuity paid for the participant's life, with a survivor annuity for the spouse's life that is at least 50% and at most 100% of the amount paid while both are alive. It must be the actuarial equivalent of a single life annuity for the participant. Any annuity with this same effect also counts.
(c) Definition of qualified preretirement survivor annuity: (1) In general — unless (2) applies, this is a survivor annuity for the surviving spouse's life. (A) The payments to the spouse must be at least what the spouse would get under the plan's joint and survivor annuity, or its actuarial equivalent, assuming: (i) if the participant died after reaching earliest retirement age, that they had retired the day before death with an immediate joint and survivor annuity; or (ii) if the participant died on or before earliest retirement age, that they had left the job on their date of death, lived to earliest retirement age, retired then with an immediate joint and survivor annuity, and died the next day. (B) The spouse must be able to start receiving payments no later than the month the participant would have reached earliest retirement age. If the participant had already left the job before dying, (A)(ii)(I) does not apply. (2) Special rule for defined contribution plans: for a defined contribution plan*, or for participants described in section 401(a)(11)(B)(ii) or (iii), the preretirement survivor annuity is one for the spouse's life whose actuarial value is at least 50% of the participant's nonforfeitable account balance as of the date of death. (3) Security interests count: any loan security interest the plan holds against the participant's account is counted when figuring the preretirement survivor annuity amount.
(d) Survivor annuities not required if married less than 1 year: (1) In general — unless (2) applies, a plan does not violate section 401(a)(11) merely because it withholds the joint and survivor or preretirement survivor annuity unless the participant and spouse were married throughout the 1-year period ending on the earlier of the annuity starting date or the participant's death. (2) Marriages within 1 year of the annuity starting date: if a participant marries within the year before the annuity starting date, and stays married to that spouse for at least a year ending on or before the participant's death, the couple is treated as married throughout that 1-year period for purposes of the joint and survivor annuity.
(e) Restrictions on cash-outs: (1) The plan may cash out the annuity immediately if its present value is small enough to be distributed without consent under section 411(a)(11). After the annuity starting date, such a cash-out needs written consent from the participant and spouse (or, if the participant died, the surviving spouse). (2) If the present value exceeds that limit, the plan may still cash it out immediately, but only with written consent from the participant and spouse (or surviving spouse). (3) Determining present value: (A) the value used cannot be less than the value calculated with the "applicable mortality table" and "applicable interest rate." (B) The applicable mortality table is based on the table used for the plan year under section 430(h)(3)(A), adjusted by the Secretary, ignoring subparagraphs (C) and (D) of that section. (C) The applicable interest rate is the adjusted first, second, and third segment rates under rules like section 430(h)(2)(C) — ignoring the adjustment in clause (iv) — for the month before the distribution or another time set by regulation. (D) Those adjusted segment rates are the rates under section 430(h)(2)(C), again ignoring clause (iv), if section 430(h)(2)(D) used the average yields for that one month instead of the usual 24-month average.
(f) Other definitions and special rules: (1) "Vested participant" means a participant with a nonforfeitable right to any part of their accrued benefit. (2) "Annuity starting date": (A) the first day of the first period an annuity payment is due, or, for a non-annuity benefit, the first day all conditions for that benefit are met; (B) a disability benefit's start date counts as the annuity starting date only if it is not an "auxiliary benefit." (3) "Earliest retirement age" is the earliest date the plan lets the participant start receiving retirement benefits. (4) The plan may account for the extra cost of providing these survivor annuities in any fair way the Secretary allows. (5) If using a benefit as loan security follows (a)(4), nothing here stops a distribution required because the participant failed to repay that loan. (6) A spouse's consent under (e)(1) or (e)(2) only counts if it meets requirements like those for consent under (a)(1)(A). (7) When writing regulations under this section and section 401(a)(11), the Secretary must consult the Secretary of Labor.
(g) Definition of qualified optional survivor annuity: (1) In general — this is an annuity for the participant's life, with a survivor annuity for the spouse equal to the "applicable percentage*" of the amount paid while both are alive, and it must be the actuarial equivalent of a single life annuity for the participant. Any annuity with the same effect also counts. (2) Applicable percentage: (A) if the plan's regular survivor annuity percentage is under 75%, the applicable percentage for this optional annuity is 75%; if it is 75% or more, the applicable percentage is 50%. (B) The "survivor annuity percentage" is the share the survivor annuity under the plan's joint and survivor annuity bears to the amount paid while both participant and spouse are alive.
A plan meets the requirements of section 401(a)(11) only if—
under the plan, each participant—
may elect at any time during the applicable election period to waive the qualified joint and survivor annuity form of benefit or the qualified preretirement survivor annuity form of benefit (or both),
if the participant elects a waiver under clause (i), may elect the qualified optional survivor annuity at any time during the applicable election period, and
may revoke any such election at any time during the applicable election period, and
the plan meets the requirements of paragraphs (2), (3), and (4) of this subsection.
Each plan shall provide that an election under paragraph (1)(A)(i) shall not take effect unless—
the spouse of the participant consents in writing to such election, (ii) such election designates a beneficiary (or a form of benefits) which may not be changed without spousal consent (or the consent of the spouse expressly permits designations by the participant without any requirement of further consent by the spouse), and (iii) the spouse’s consent acknowledges the effect of such election and is witnessed by a plan representative or a notary public, or
it is established to the satisfaction of a plan representative that the consent required under subparagraph (A) may not be obtained because there is no spouse, because the spouse cannot be located, or because of such other circumstances as the Secretary* may by regulations prescribe.
Any consent by a spouse (or establishment that the consent of a spouse may not be obtained) under the preceding sentence shall be effective only with respect to such spouse.
Each plan shall provide to each participant, within a reasonable period of time before the annuity starting date (and consistent with such regulations as the Secretary may prescribe), a written explanation of—
the terms and conditions of the qualified joint and survivor annuity and of the qualified optional survivor annuity,
the participant’s right to make, and the effect of, an election under paragraph (1) to waive the joint and survivor annuity form of benefit,
the rights of the participant’s spouse under paragraph (2), and
the right to make, and the effect of, a revocation of an election under paragraph (1).
Each plan shall provide to each participant, within the applicable period with respect to such participant (and consistent with such regulations as the Secretary may prescribe), a written explanation with respect to the qualified preretirement survivor annuity comparable to that required under subparagraph (A).
For purposes of clause (i), the term “applicable period” means, with respect to a participant, whichever of the following periods ends last:
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.
A reasonable period after the individual becomes a participant.
A reasonable period ending after paragraph (5) ceases to apply to the participant.
A reasonable period ending after section 401(a)(11) applies to the participant.
In the case of a participant who separates from service before attaining age 35, the applicable period shall be a reasonable period after separation.
Each plan shall provide that, if section 401(a)(11) applies to a participant when part or all of the participant’s accrued benefit is to be used as security for a loan, no portion of the participant’s accrued benefit may be used as security for such loan unless—
the spouse of the participant (if any) consents in writing to such use during the 90-day period ending on the date on which the loan is to be so secured, and
requirements comparable to the requirements of paragraph (2) are met with respect to such consent.
The requirements of this subsection shall not apply with respect to the qualified joint and survivor annuity form of benefit or the qualified preretirement survivor annuity form of benefit, as the case may be, if such benefit may not be waived (or another beneficiary selected) and if the plan fully subsidizes the costs of such benefit.
For purposes of subparagraph (A), a plan fully subsidizes the costs of a benefit if under the plan the failure to waive such benefit by a participant would not result in a decrease in any plan benefits with respect to such participant and would not result in increased contributions from such participant.
For purposes of this subsection, the term “applicable election period” means—
in the case of an election to waive the qualified joint and survivor annuity form of benefit, the 180-day period ending on the annuity starting date, or
in the case of an election to waive the qualified preretirement survivor annuity, the period which begins on the first day of the plan year in which the participant attains age 35 and ends on the date of the participant’s death.
In the case of a participant who is separated from service, the applicable election period under subparagraph (B) with respect to benefits accrued before the date of such separation from service shall not begin later than such date.
Notwithstanding any other provision of this subsection—
A plan may provide the written explanation described in paragraph (3)(A) after the annuity starting date. In any case to which this subparagraph applies, the applicable election period under paragraph (6) shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the application of clause (i), except that such regulations may not limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
A plan may permit a participant to elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under subparagraph (A)) if the distribution commences more than 7 days after such explanation is provided.
For purposes of this section and section 401(a)(11), the term “qualified joint and survivor annuity” means an annuity—
for the life of the participant with a survivor annuity for the life of the spouse which is not less than 50 percent of (and is not greater than 100 percent of) the amount of the annuity which is payable during the joint lives of the participant and the spouse, and
which is the actuarial equivalent of a single annuity for the life of the participant.
Such term also includes any annuity in a form having the effect of an annuity described in the preceding sentence.
For purposes of this section and section 401(a)(11)—
Except as provided in paragraph (2), the term “qualified preretirement survivor annuity” means a survivor annuity for the life of the surviving spouse of the participant if—
the payments to the surviving spouse under such annuity are not less than the amounts which would be payable as a survivor annuity under the qualified joint and survivor annuity under the plan (or the actuarial equivalent thereof) if—
in the case of a participant who dies after the date on which the participant attained the earliest retirement age, such participant had retired with an immediate qualified joint and survivor annuity on the day before the participant’s date of death, or
in the case of a participant who dies on or before the date on which the participant would have attained the earliest retirement age, such participant had—
separated from service on the date of death,
survived to the earliest retirement age,
retired with an immediate qualified joint and survivor annuity at the earliest retirement age, and
died on the day after the day on which such participant would have attained the earliest retirement age, and
under the plan, the earliest period for which the surviving spouse may receive a payment under such annuity is not later than the month in which the participant would have attained the earliest retirement age under the plan.
In the case of an individual who separated from service before the date of such individual’s death, subparagraph (A)(ii)(I) shall not apply.
In the case of any defined contribution plan* or participant described in clause (ii) or (iii) of section 401(a)(11)(B), the term “qualified preretirement survivor annuity” means an annuity for the life of the surviving spouse the actuarial equivalent of which is not less than 50 percent of the portion of the account balance of the participant (as of the date of death) to which the participant had a nonforfeitable right (within the meaning of section 411(a)).
For purposes of paragraphs (1) and (2), any security interest held by the plan by reason of a loan outstanding to the participant shall be taken into account in determining the amount of the qualified preretirement survivor annuity.
Except as provided in paragraph (2), a plan shall not be treated as failing to meet the requirements of section 401(a)(11) merely because the plan provides that a qualified joint and survivor annuity (or a qualified preretirement survivor annuity) will not be provided unless the participant and spouse had been married throughout the 1-year period ending on the earlier of—
the participant’s annuity starting date, or
the date of the participant’s death.
For purposes of paragraph (1), if—
a participant marries within 1 year before the annuity starting date, and
the participant and the participant’s spouse in such marriage have been married for at least a 1-year period ending on or before the date of the participant’s death,
such participant and such spouse shall be treated as having been married throughout the 1-year period ending on the participant’s annuity starting date.
A plan may provide that the present value of a qualified joint and survivor annuity or a qualified preretirement survivor annuity will be immediately distributed if such value does not exceed the amount that can be distributed without the participant’s consent under section 411(a)(11). No distribution may be made under the preceding sentence after the annuity starting date unless the participant and the spouse of the participant (or where the participant has died, the surviving spouse) consents in writing to such distribution.
If—
the present value of the qualified joint and survivor annuity or the qualified preretirement survivor annuity exceeds the amount that can be distributed without the participant’s consent under section 411(a)(11), and
the participant and the spouse of the participant (or where the participant has died, the surviving spouse) consent in writing to the distribution,
the plan may immediately distribute the present value of such annuity.
For purposes of paragraphs (1) and (2), the present value shall not be less than the present value calculated by using the applicable mortality table and the applicable interest rate.
For purposes of subparagraph (A), the term “applicable mortality table” means a mortality table, modified as appropriate by the Secretary, based on the mortality table specified for the plan year under subparagraph (A) of section 430(h)(3) (without regard to subparagraph (C) or (D) of such section).
For purposes of subparagraph (A), the term “applicable interest rate” means the adjusted first, second, and third segment rates applied under rules similar to the rules of section 430(h)(2)(C) (determined by not taking into account any adjustment under clause (iv) thereof) for the month before the date of the distribution or such other time as the Secretary may by regulations prescribe.
For purposes of subparagraph (C), the adjusted first, second, and third segment rates are the first, second, and third segment rates which would be determined under section 430(h)(2)(C) (determined by not taking into account any adjustment under clause (iv) thereof) if section 430(h)(2)(D) were applied by substituting the average yields for the month described in subparagraph (C) for the average yields for the 24-month period described in such section.
For purposes of this section and section 401(a)(11)—
The term “vested participant” means any participant who has a nonforfeitable right (within the meaning of section 411(a)) to any portion of such participant’s accrued benefit.
The term “annuity starting date” means—
the first day of the first period for which an amount is payable as an annuity, or
in the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the participant to such benefit.
For purposes of subparagraph (A), the first day of the first period for which a benefit is to be received by reason of disability shall be treated as the annuity starting date only if such benefit is not an auxiliary benefit.
The term “earliest retirement age” means the earliest date on which, under the plan, the participant could elect to receive retirement benefits.
A plan may take into account in any equitable manner (as determined by the Secretary) any increased costs resulting from providing a qualified joint or survivor annuity or a qualified preretirement survivor annuity.
If the use of any participant’s accrued benefit (or any portion thereof) as security for a loan meets the requirements of subsection (a)(4), nothing in this section or section 411(a)(11) shall prevent any distribution required by reason of a failure to comply with the terms of such loan.
No consent of a spouse shall be effective for purposes of subsection (e)(1) or (e)(2) (as the case may be) unless requirements comparable to the requirements for spousal consent to an election under subsection (a)(1)(A) are met.
In prescribing regulations under this section and section 401(a)(11), the Secretary shall consult with the Secretary of Labor.
For purposes of this section, the term “qualified optional survivor annuity” means an annuity—
for the life of the participant with a survivor annuity for the life of the spouse which is equal to the applicable percentage* of the amount of the annuity which is payable during the joint lives of the participant and the spouse, and
which is the actuarial equivalent of a single annuity for the life of the participant.
Such term also includes any annuity in a form having the effect of an annuity described in the preceding sentence.
For purposes of paragraph (1), if the survivor annuity percentage—
is less than 75 percent, the applicable percentage is 75 percent, and
is greater than or equal to 75 percent, the applicable percentage is 50 percent.
For purposes of subparagraph (A), the term “survivor annuity percentage” means the percentage which the survivor annuity under the plan’s qualified joint and survivor annuity bears to the annuity payable during the joint lives of the participant and the spouse.
Source credit: (Added Pub. L. 98–397, title II, § 203(b), Aug. 23, 1984, 98 Stat. 1441; amended Pub. L. 99–514, title XI, § 1139(b), title XVIII, § 1898(b)(1)(A), (4)(A), (5)(A), (6)(A), (8)(A), (9)(A), (10)(A), (11)(A), (12)(A), (15)(A), (B), Oct. 22, 1986, 100 Stat. 2487, 2944, 2945, 2947–2951; Pub. L. 100–647, title I, § 1018(u)(9), Nov. 10, 1988, 102 Stat. 3590; Pub. L. 101–239, title VII, § 7862(d)(1)(A), Dec. 19, 1989, 103 Stat. 2433; Pub. L. 103–465, title VII, § 767(a)(2), Dec. 8, 1994, 108 Stat. 5038; Pub. L. 104–188, title I, § 1451(a), Aug. 20, 1996, 110 Stat. 1815; Pub. L. 105–34, title X, § 1071(a)(2), Aug. 5, 1997, 111 Stat. 948; Pub. L. 107–147, title IV, § 411(r)(1), Mar. 9, 2002, 116 Stat. 51; Pub. L. 109–280, title III, § 302(b), title X, § 1004(a), title XI, § 1102(a)(1)(A), Aug. 17, 2006, 120 Stat. 920, 1053, 1056; Pub. L. 110–458, title I, § 103(b)(2)(A), Dec. 23, 2008, 122 Stat. 5103; Pub. L. 112–141, div. D, title II, § 40211(a)(2)(C), July 6, 2012, 126 Stat. 847; Pub. L. 113–295, div. A, title II, § 221(a)(57)(B)(i), Dec. 19, 2014, 128 Stat. 4046.)
- 1984Enacted · Pub. L. 98-397 · 98 Stat. 1441
- 1986Amended · Pub. L. 99-514 · 100 Stat. 2487, 2944, 2945, 2947
- 1988Amended · Pub. L. 100-647 · 102 Stat. 3590
- 1989Amended · Pub. L. 101-239 · 103 Stat. 2433
- 1994Amended · Pub. L. 103-465 · 108 Stat. 5038
- 1996Amended · Pub. L. 104-188 · 110 Stat. 1815
- 1997Amended · Pub. L. 105-34 · 111 Stat. 948
- 2002Amended · Pub. L. 107-147 · 116 Stat. 51
- 2006Amended · Pub. L. 109-280 · 120 Stat. 920, 1053, 1056
- 2008Amended · Pub. L. 110-458 · 122 Stat. 5103
- 2012Amended · Pub. L. 112-141 · 126 Stat. 847
- 2014Amended · Pub. L. 113-295 · 128 Stat. 4046
A history note hasn’t been published yet. The record shows enactment by Pub. L. 98-397 on 1984-08-23.
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