Qualified Pre-Retirement Survivor Annuity (QPSA)

Qualified Pre-Retirement Survivor Annuity (QPSA) is a death benefit that is paid to the surviving spouse of a deceased employee. If the employee dies before retirement, the qualified pre-retirement survivor annuity is paid to recompense the surviving spouse for the loss of retirement benefits that would have otherwise been paid to the employee. As the name implies, QPSAs are paid only for qualified plans.

Qualified pre-retirement survivor annuity benefits must be offered by all types of qualified plans to vested participants, including defined-benefit plans and money purchase plans. ERISA mandates how the payments for a QPSA should be calculated. Both employee and spouse must sign off on a waiver of QPSA benefits and have it witnessed by either a notary public or authorized plan representative.

According to the IRS, a "QPSA is a form of a death benefit paid as a life annuity​​​​​​​ (a series of payments, usually monthly, for life) to the surviving spouse (or a former spouse, child or dependent who must be treated as a surviving spouse under a QDRO) of a participant who: was vested in his or her retirement plan benefits; died before retirement; and was married to the surviving spouse (for at least one year if the plan so provides) (or to a former spouse named in a QDRO​​​​​​​).

In addition, the rules that apply to survivor benefit payments to any designated beneficiary who is not the spouse are: incidental benefit rule - the requirement that death and other nonretirement benefits paid by the plan be incidental to the primary purpose of the plan; and minimum distribution requirements – payment of survivor benefits to a non-spouse beneficiary be under the 5-year rule or the life expectancy rule."

The IRS noted that some types of qualified plans may be exempt from having to provide a QPSA. This happens "if they: are defined contribution plans (other than a money purchase or target benefit plans); require the plan’s death benefit be paid in full to the surviving spouse unless the spouse has consented to another beneficiary; do not offer a life annuity option as a form of benefit under the plan; and do not contain a direct transfer from another plan, which was required to provide a survivor annuity.

"If a retirement plan offers a QPSA, it must give a participant a QPSA notice during the period beginning when he or she is age 32 and ending with the close of the plan year before the participant is age 35, or within one year from when an employee becomes a plan participant if he or she is hired after age 35."