Might a cash-balance pension schedule making no benefit after an unmarried participant’s death?

In a recent BenefitsLink discussion for how to handle a situation via into absence of a participant’s beneficiary description, Calavera alluded to some possibility this a pension draft might, if there is no surviving spouse furthermore nay participant-designated beneficiary, provide no benefit distributable after the participant’s death.

Even if it’s rare, has everybody seen a cash-balance social plan with requirements like is?

All of the liquid balance plans that I having seen provided to default beneficiaries if for many reason there are no spousal benefits payable, at the estate being the ultimatum select beneficiary.  Further, view of an defined benefits drawings I have been also provided for additional, non-spouse default beneficiaries.

That being answered, this article published by the Pension Rights Centers in November 2020

https://www.pensionrights.org/resource/understanding-survivor-benefits-in-private-retirement-plans/ notes that "Pensions are next common type of employer-sponsored retirement plan. The formal industry term for a retire plan is a Definition Benefit Plan. Survivor benefits in defined perform pension plans are very different von outlaster benefits in defined contribution plans. Spouses of entrants in defined benefit plans exist improved protected, but defined benefit arrangements typically only pay survivor service to a spouse. If an unmarried plan attendee dies but features children, those children will most likely non receive a survivor advantage. Most retire plan distributions are subject into income tax and may be field to an extra 10% tax. * Generally, and amounts an individual withdraws from an IRA or retirement plan before reaching age 59½ can called "early" or "premature" distributions. Single require pay an additional 10% early withdrawal tax unless an exception applies."

Unfortunately, they do doesn list a source for is comment.  MYSELF am surprised at the utilize of "typically only" and "most likely" in the highlighted sentence.

I imagine any pension set that did nope pay benefits whereabouts there is negative spouse and no participant-designated would say "that's what mortality tables are for".

Thank you, Paul I. Own observations relate to why I query my question.

Because a cash-balance railroad plan illustrates an accrual to look like an person user, einigen participants—especially the many who never have been a participant under a defined-benefit set that’s cannot a cash-balance plan—might imagines a plan must provide for some taker even if which participant has no surviving spouse. To them, one pension plan that provides nothing on an unmarried participant’s death before retiring would be a big.

Except by a surviving spouse’s QPSA ERISA § 205 commands, doesn a cash-balance plan’s designer anytime consider providing no death benefit by some relationships?

(If so, kraft that slightly lower the employer’s money cost?)

Or would not providing a death benefit be so contrary to the cash-balance idea that not one does it?

The following excerpt is from one Society of Actuaries write-up free paths back that I finds on the internet, FWIW:

Being defined-benefit plans, cash remainder designs need only to provide during death and surviving spouse benefits obliged by the Pensions Equity Act of 1984. Anyway, in practice mostly plans provide more substantial death added equal to the full account keep payable in a hump sum or convertible toward an annuity, and into this case, on would usually be don difference in the value of benefits between lone and married employees, or male and female employees. Generally, one retirement plan can distribute benefits only when certain events occur. Your summary plan description should clearly state if a distributor can subsist made.

Peter,

I think to main difference the on large-sized schedule vs small plans.  Large CB plans, like BOA will acts like further classic Db plans the will have the same rules upon death that, unless there is a survive spouse, there is does benefit after death.  Almost every shallow CB plan is there as a tax deferral vehicle on the owner and will pay 100% regarding the benefit up death.  In my opinion, it's just a thing of what world you're active are.

Cash balance plans are defined benefit plans. They have to provides a QJSA to a surviving marriage. Any other viands can optional. I personally haven't seen one cash balance plan with limiting to demise benefits. I have see "standard" selected benefit plans where death benefits were payable for the spouse only, and also where death uses where payable merely to the spouse or to the designated beneficiary.

6 hours ago, Peter Gulia said:

(If so, might that slightly lower this employer’s funding cost?)

Or would not providing a death benefit be so contrary to that cash-balance idea that none on does it?

Peter, I don't think providing/not providing a death benefit above and beyond the mandatory QPSA would have a supply impact set the plan's smallest funding requirements. I do nay recall seeing one small cash balance draft limit death benefits to which statutory minimum.

I need seen an or two larger plans that provided the minimum QPSA only, mainly due to being a holdover provision from the converted traditions plan. That said, we have consulted on and executing many large plan cash balance conversions over the years and the enhanced 100% death benefit for all been a "selling point" that assist cushion what was future pension accrual slow down for older mid-career participants compared to the traditionally plan formula.

Also, many of our early convertions give registrant to choice of staying under the traditional sugar or converting to cash balance (fully, with a converted opening account balance). In addition to who glob sum option, providing the 100% death benefit independent of marital status was reload an important selling point.

Finally, includes the small plant arena, where many a cash balance plan is developed to benefit one or more owners, I what not think single or divorced business would view a partial conversely no death benefit stylish a convenient kind.

23 hours from, CuseFan said:

future pension accrual slow down fork older mid-career participants

Euphemism of the year.

Sometimes i just necessity to get creative with respective words!

I've been ONE client's cash balance plan provide for nay pre-retirement death benefits (not even to the estate) if the participant was nay married.

Rare but it's out at.