What is a Qualified Pre-Retirement Survivor Annuity (QPSA)?
A qualified pre-retirement survivor annuity (QPSA) is a company-sponsored death benefit that provides the employee's surviving spouse with an annuity payment should the employee die before receiving retirement benefits.
How Does a Qualified Pre-Retirement Survivor Annuity (QPSA) Work?
For example, let's assume that John works at Company XYZ, which has a pension plan. This defined benefit plan offers a QPSA, which means that if John dies before he retires or begins receiving retirement benefits from the pension plan, his wife, Jane, will receive the QPSA.
The payment amount of the QPSA is calculated according to ERISA guidelines.
Why Does a Qualified Pre-Retirement Survivor Annuity (QPSA) Matter?
A qualified pre-retirement survivor annuity (QPSA) is a great benefit that offers financial security to an employee's family, much like life insurance.
Defined benefit plans must offer QPSAs to employees who have contributed to them, but most defined contribution plans (such as 401(k) plans, profit sharing plans, etc.) do not if certain conditions are met.
It should also be noted that spouses have to be married for at least one year in order to be eligible for benefits. A participant may waive a QPSA if the spouse consents (this often is the case if the participant wants to name an alternative beneficiary, such as a dependent).
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
You’ve probably heard of a checking and savings account before, and you might even have your own accounts. But which is the best place to keep your money? Below we’ll compare the features of...Read More →
When aviator, film producer and engineer Howard Hughes died in 1976, no will was found. Suddenly, a gas station attendant named Melvin Dummar arrived on the scene waving a handwritten will....Read More →
Mistakes are difficult to avoid in something as complex as home buying, especially for the first time home buyer. And it's the simple missteps that can end up costing you for years. After...Read More →
If you've ever had a job with a terrible commute, you know that road construction is like glitter -- once it gets on a city, it's almost impossible to get rid of, and it shows up everywhere....Read More →