What Is a Qualified Pre-Retirement Survivor Annuity?

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 offer compensation to 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 in the case of qualified plans.

Key Takeaways

  • A qualified pre-retirement survivor annuity (QPSA) provides monetary distribution to a surviving spouse of a deceased employee. 
  • The employee must be under a qualified plan in order for compensation to occur.
  • The Employee Retirement Income Security Act (ERISA) dictates how payments are to be calculated.
  • There are rules to follow for survivor benefit payments to non-spouse beneficiaries.
  • A QPSA notice is required if a retirement plan offers a QPSA.

How a QPSA Works

A QPSA provides a way for an individual to provide for their surviving spouse or other beneficiary should they become deceased prior to the institution of their retirement benefits. QPSA benefits are ones that must be offered with all types of qualified plans to vested participants. Some of these plans include defined-benefit plans and money purchase plans. 

The Employee Retirement Income Security Act (ERISA) mandates how the payments for a QPSA should be calculated. Both the employee and the spouse must sign off on a waiver of QPSA benefits and have it witnessed by either a notary public or an authorized plan representative.

According to the Internal Revenue Service (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 former spouse, child or dependent who must be treated as a surviving spouse under a QDRO) of a participant [...],” where there are set conditions that must be met. 

QPSA provides a level of protection for a surviving spouse in the form of monthly payments for life.

Requirements for a QPSA

For QPSA payments to be made, the participant must have vested benefits and died before retirement. As well, if it’s a spouse that is to receive QPSA payments, they must be married for at least one year. 

Some types of qualified plans may be exempt from having to provide a QPSA to a surviving spouse. This happens if the are defined contribution plans, if they do not offer a life annuity option, or do not or if they require the benefit be paid in full to the surviving spouse.

A QPSA must be sent to the participant if the plan offers such the QPSA. The notice must be sent when the participant is age 32 and ending before they are 35, or within one year from when an employee becomes a plan participant if the are older than 35.