What is a 'Qualified Joint and Survivor Annuity (QJSA)'

A qualified joint and survivor annuity (QJSA) provides a lifetime payment to an annuitant and spouse, child or dependent from a qualified plan. QJSA rules apply to money-purchase pension plans, defined benefit plans and target benefits. They can also apply to profit-sharing and 401(k) and 403(b) plans, but only if so elected under the plan.

BREAKING DOWN 'Qualified Joint and Survivor Annuity (QJSA)'

The plan document of a qualified QJSA plan usually provides the annuity payout percentage, but the general requirement is that the survivor annuity must be at least 50% and no more than 100% of the annuity paid to the participant. If the participant is unmarried, the annuity is paid for his or her life expectancy.

According to the Internal Revenue Service (IRS), "a qualified plan like a defined benefit plan, money purchase plan or target benefit plan must provide a QJSA to all married participants as the only form of benefit unless the participant and spouse, if applicable, consent in writing to another form of benefit payment." For more on QJSA rules, the IRS provides an information page. Rules governing QJSAs can be found in Title 26, Chapter I, Subchapter A, Section 1.401(a)-20 on the Federal Register.

Qualified Joint and Survivor Annuity: Features and Considerations

Qualified joint and survivor annuities for married participants have the following features.

  • Retirement payments are made at regular intervals over retirement (primarily monthly).
  • After death, the plan will make a monthly payment to a surviving spouse of at least 50% of the original benefit payment.

Like many annuities, a QJSA provides a lifetime benefit to a primary participant and spouse via monthly payments. As such, they should be factored in to any financial planning and retirement income and expense scenarios. Such a product is not subject to diminishing payments due to poor stock market performance. QJSA distributions, once initiated, are not changeable. Also, distributions in addition to the regular monthly payment are not allowed. If the participant is in poor health, a QJSA (like any annuity) may not be a good investment of the assets required to fund such an investment vehicle. Payments may also lose purchasing power over time unless adjusted for a cost-of-living increase.

Qualified Joint and Survivor Annuity Example

An individual's employer-sponsored 401(k) plan offers a QJSA that provides a monthly $1,500 retirement income at age 65. It also provides for a $1,000 monthly retirement benefit for the spouse when that individual dies. That benefit is paid until the surviving spouse dies. The individual may choose to receive a lump-sum distribution of benefits, but only with the written consent of their spouse, witnessed by a notary public or a plan representative. One exception is that a plan may pay a lump-sum distribution to a participant without first obtaining their (and their spouse's) permission if that sum is $5,000 or less. If a participant gets divorced they may be required to treat their former spouse as a current spouse as part of a qualified domestic relations order or according to the terms of the divorce. Should a divorced participant want to change their beneficiary of survivor benefits they will have to contact a plan administrator.

RELATED TERMS
  1. Benefit Offset

    Benefit offset is a reduction in the amount of payments received ...
  2. Qualified Pre-Retirement Survivor ...

    Qualified Pre-Retirement Survivor Annuity - QPSA - is a death ...
  3. Life Annuity

    A life annuity is an insurance product that features a predetermined ...
  4. Whole Life Annuity

    A Whole Life Annuity is a financial product sold by insurance ...
  5. Term Certain Annuity

    A term certain annuity is an insurance product that guarantees ...
  6. Annuity

    An annuity is a financial product that pays out a fixed stream ...
Related Articles
  1. Taxes

    The Tax Benefits Of Having A Spouse

    Check out the perks designed to promote and preserve your post-work savings - if you're married, that is.
  2. Financial Advisor

    Annuities: The Good, Bad and the Ugly

    Annuities suffer from a few perception problems. This primer that covers the good, the bad and the ugly of annuities.
  3. Retirement

    Are Annuities Retirement-Only Investments?

    Learn more about why annuities are generally purchased and the way that they can positively and negatively affect an individual preparing for retirement.
  4. Financial Advisor

    Estate Planning for a Surviving Spouse

    Estate planning for surviving spouses can be difficult for a number of reasons, so it's important to have good support and financial advice.
  5. Financial Advisor

    Advising FAs: Explaining Annuities to a Client

    Conceptually speaking, annuities can be thought of as a reverse form of life insurance.
  6. Investing

    Introduction to Annuities

    Everything you need to know about annuities.
  7. Investing

    Does an Annuity Make More Money Than Direct Investing?

    Whether an annuity or direct investing makes more financial sense depends on many factors.
Hot Definitions
  1. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  2. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  3. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  4. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  5. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  6. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
Trading Center