IRS Publication 6391 – In the complex world of employee benefit plans, ensuring compliance with IRS regulations is crucial for plan administrators, employers, and participants alike. One key document that provides detailed guidance on joint and survivor annuities is IRS Publication 6391, titled “Employee Benefit Plans: Explanation No. 3 Joint and Survivor Determination of Qualification.” This publication outlines the requirements under Internal Revenue Code (IRC) sections 401(a)(11) and 417, helping plans maintain their qualified status. Whether you’re a plan sponsor navigating qualification rules or a participant understanding your retirement benefits, this guide breaks down the essentials of Publication 6391 using the latest available information.
What is IRS Publication 6391?
IRS Publication 6391 serves as an explanatory resource for the joint and survivor annuity provisions in qualified retirement plans. Revised in June 2021, it includes Worksheet Number 3 (Form 5625) and Deficiency Checksheet 3 (Form 6042) to help identify compliance issues during plan reviews. The document focuses on how defined benefit plans, money purchase pension plans (including target benefit plans), and certain employee stock ownership plans (ESOPs) must provide survivor benefits to protect spouses. It does not apply to most defined contribution plans if they meet specific conditions, such as paying the full nonforfeitable accrued benefit to the surviving spouse upon the participant’s death.
The publication is part of a series of IRS explanations designed to assist with plan qualification determinations. It’s particularly relevant for plans subject to the Retirement Equity Act of 1984 (REA) amendments, which enhanced spousal protections in retirement benefits. As of the latest IRS listings, this revision remains the current version, with no major updates noted beyond 2021.
Key Qualification Requirements for Employee Benefit Plans
To qualify under IRC rules, plans must adhere to survivor annuity requirements unless exempted. These apply to participants with at least one hour of service or paid leave after August 22, 1984, with transition rules for earlier participants. Exemptions include defined contribution plans (excluding money purchase or target benefit plans) that:
- Pay the full nonforfeitable accrued benefit to the surviving spouse (or designated beneficiary with consent) upon death.
- Do not allow life annuity elections by participants.
- Are not transferee or offset plans.
For money purchase ESOPs, portions subject to IRC section 409(h) put options may also be exempt if similar conditions are met.
Plans must also comply with changes outlined in IRS Notice 2020-83 for the 2020 Required Amendments List, ensuring ongoing qualification. Annuity contracts distributed by the plan, including deferred ones, must provide qualified joint and survivor annuities (QJSAs) and preretirement survivor annuities (QPSAs) where applicable.
Rules for Qualified Joint and Survivor Annuity (QJSA)
A QJSA is the default form of benefit for vested married participants alive on the annuity starting date—the first day payments are made as an annuity or other form. It consists of an immediate annuity for the participant’s life, followed by a survivor annuity for the spouse (50% to 100% of the joint amount). For unmarried participants, it’s a single life annuity.
Key rules include:
- Actuarial Equivalence: In defined benefit plans, the QJSA must be at least as valuable as any other optional form of benefit. In defined contribution plans, it’s based on the nonforfeitable account balance.
- Commencement: Benefits must start immediately unless waived with spousal consent.
- Availability: Offered at the earliest retirement age under the plan.
- Disability Benefits: QJSA applies if benefits reduce future payments at retirement age; otherwise, they may be treated as auxiliary.
- Retroactive Starting Dates: Allowed in defined benefit plans with participant election, spousal consent, and make-up payments, subject to IRC section 415 limits.
Plans can offer multiple actuarially equivalent QJSAs but must specify the automatic form.
Spousal Consent and Notice Requirements
Spousal protections are a cornerstone of these rules. Consent is required for:
- Waiving QJSA or QPSA.
- Electing alternative benefit forms or beneficiaries.
- Using accrued benefits as loan security (unless the benefit is $5,000 or less).
Consent must be written, witnessed by a plan representative or notary, and specify the beneficiary and form. The waiver period is 180 days before the annuity starting date (90 days pre-2007). Notices must be provided 30-180 days prior, explaining rights, options, and waiver implications.
Special considerations:
- Marriage Status: Participants are treated as married if wed on the annuity starting date, even without a full prior year.
- Same-Sex Spouses: Recognized since U.S. v. Windsor (2013), with plan amendments required by specified deadlines.
- Small Benefits: No consent needed for distributions of $5,000 or less.
Pre-nuptial agreements cannot substitute for consent, and former spouses’ consents don’t bind new ones without a Qualified Domestic Relations Order (QDRO).
Qualified Optional Survivor Annuity (QOSA)
For plan years after December 31, 2007, plans must offer a QOSA as an alternative if the QJSA is waived. This provides a survivor annuity of 75% if the QJSA is under 75%, or 50% if 75% or higher, and must be actuarially equivalent to a single life annuity. This enhances flexibility while maintaining spousal protections.
Updates and Revisions in IRS Publication 6391
The 2021 revision incorporates updates like expanded consent periods and same-sex marriage recognitions effective from September 16, 2013. Plans must amend for inconsistencies, with deadlines tied to legislative sessions for governmental plans. Future regulations may alter technical principles, so staying informed via IRS notices is essential.
Why IRS Publication 6391 Matters for Your Retirement Planning?
Compliance with joint and survivor rules ensures that retirement plans protect families while qualifying for tax advantages. For employers, using tools like Worksheet 3 helps avoid deficiencies during IRS audits. Participants benefit from understanding their rights to secure spousal benefits. Always consult the official IRS document or a tax professional for personalized advice, as rules can evolve. Download the latest PDF from the IRS website to dive deeper into these critical explanations.