Читать книгу Auditing Employee Benefit Plans - Josie Hammond - Страница 36

The distribution rules for pension plans follow a slightly different classification than we have applied to this point. Rather than splitting up plans between defined benefit and defined contribution or pension plans and discretionary plans, the division is between plans subject to joint and survivor rules and other plans. In general, discretionary plans are not subject to joint and survivor. All defined benefit and money purchase plans are subject to the joint and survivor rules. Other plans are if the plan terms call for the normal benefit distribution form to be an annuity. Thus, for example, many 403(b) plans could be exempt from these rules but have chosen to provide annuity distributions and must, therefore, comply with the joint and survivor requirements.

Plans subject to the joint and survivor annuity rules require many notices. There are preretirement elections, spousal consents and post-separation distribution elections. The rules are required to be described in the plan document. Compliance with these notice requirements is a qualification standard.

Note: This is an area where violation could have a significant effect upon the plan’s financial statements. If a distribution is made to the participant without the spousal consent, it is possible that the spouse has a claim for half of the previously distributed benefit. If funds cannot be recovered from the participant, the plan sponsor might have to contribute additional funds to cover this additional distribution.

Other plans have fewer restrictions on distributions. Again, the terms and conditions for distributions will be described in detail in the plan.