\[4830-01-p\]

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

\[TD 9076\]

RIN 1545-AX34

Special Rules Under Section 417(a)(7) for Written Explanations Provided
by Qualified Retirement Plans After Annuity Starting Dates

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations relating to the
special rule added by the Small Business Job Protection Act of 1996
which permits the required written explanations of certain benefits to
be provided by qualified retirement plans to plan participants after the
annuity starting date. These final regulations affect sponsors and
administrators of qualified retirement plans, and participants in those
plans.

DATES: [Effective Date]{.underline}: These regulations are effective
July 16, 2003.

[Applicability Date]{.underline}: These regulations apply to plan years
beginning on or after January 1, 2004.

FOR FURTHER INFORMATION CONTACT: Robert Walsh (202) 622-6090 (not a
toll-free number).

SUPPLEMENTARY INFORMATION:

**Paperwork Reduction Act**

The collection of information contained in these final regulations has
been reviewed and approved by the Office of Management and Budget in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d))
under control number 1545-1724.

The collection of information in this final regulation is in
§1.417(e)-1(b)(3)(iv)(B) and §1.417(e)-1(b)(3)(v)(A). This collection of
information is required by the IRS to ensure that the participant and
the participant's spouse consent to a form of distribution from a
qualified retirement plan that may result in reduced periodic payments.

An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.

Comments concerning the accuracy of this burden estimate and suggestions
for reducing this burden should be sent to the **Internal Revenue
Service**, Attn: IRS Reports Clearance Officer, W:CAR:MP:T:T:SP,
Washington, DC 20224, and to the **Office of Management and Budget**,
Attn: Desk Officer for the Department of the Treasury, Office of
Information and Regulatory Affairs, Washington, DC 20503.

Books or records relating to a collection of information must be
retained as long as their contents might become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.

**Background**

This document contains amendments to 26 CFR part 1 under section
417(a)(7). On January 17, 2001, a notice of proposed rulemaking
(REG-109481-99) was published in the **Federal Register** (66 FR 3916)
under section 417(a)(7) of the Internal Revenue Code. No public hearing
was requested or held. Written comments responding to the notice of
proposed rulemaking were received. After consideration of all the
comments, the proposed regulations are adopted as amended by this
Treasury decision.

Section 401(a)(11) of the Internal Revenue Code provides that, subject
to certain exceptions, all distributions from a qualified plan must be
made in the form of a qualified joint and survivor annuity (QJSA). One
such exception is provided in section 417, which allows a participant to
elect to waive the QJSA in favor of another form of distribution.
Section 417(a)(2) provides that, for the waiver to be valid, the
participant=s spouse must consent to the waiver. Section 417(a)(3)(A)
requires a qualified plan to provide to each participant, within a
reasonable period of time before the annuity starting date, a written
explanation (QJSA explanation) that describes the QJSA, the right to
waive the QJSA, and the rights of the participant=s spouse.

Section 417(a)(7), which was added to the Code by section 1451(a) of the
Small Business Job Protection Act of 1996, Public Law 104-188 (110 Stat.
1755) (SBJPA), creates an exception to the rules of section
417(a)(3)(A), effective for plan years beginning after December 31,
1996. Section 417(a)(7)(A) provides that, notwithstanding any other
provision of section 417(a), a plan may furnish the QJSA explanation
after the annuity stating date, as long as the applicable election
period is extended for at least 30 days after the date on which the
explanation is furnished. Thus, section 417(a)(7)(A) allows the annuity
starting date to be a date that is earlier than the date the QJSA
explanation is provided, thereby allowing the retroactive payment of
benefits that are attributable to the period before the QJSA explanation
is provided. Section 417(a)(7)(A)(ii) provides that the Secretary may
limit the application of the provision permitting the selection of a
retroactive annuity starting date by regulations, except that the
regulations may not limit the period of time by which the annuity
starting date precedes the furnishing of the written explanation other
than by providing that the retroactive annuity starting date may not be
earlier than termination of employment.

Section 205(c)(8) of the Employee Retirement Income Security Act of
1974, Public Law 93-406 (88 Stat. 829) (ERISA), provides a parallel rule
to section 417(a)(7) of the Code that applies under Title I of ERISA,
and authorizes the Secretary of the Treasury to issue regulations
limiting the application of the general rule. Thus, Treasury regulations
issued under section 417(a)(7) of the Code apply as well for purposes of
section 205(c)(8) of ERISA.

**Explanation of Provisions**

In accordance with section 417(a)(7)(A), these regulations provide that
the QJSA explanation may be furnished on or after the annuity starting
date under certain circumstances. The regulations refer to the annuity
starting date in such cases as the Aretroactive annuity starting date@,
define how payments are made in the case of a retroactive annuity
starting date, and set conditions for the use of a retroactive annuity
starting date.

Like the proposed regulations, the final regulations provide that a
retroactive annuity starting date may be used only if the plan provides
for it and the participant affirmatively elects to use the retroactive
annuity starting date. If a participant affirmatively elects a
retroactive annuity starting date, the participant must be put in
approximately the same situation he or she would have been in had
benefit payments actually commenced on the retroactive annuity starting
date. Accordingly, in the case where a participant affirmatively elects
a retroactive annuity starting date, the plan benefits must be
determined as of that retroactive annuity starting date (including the
application of section 415 and, if applicable, section 417(e)(3) as of
that retroactive annuity starting date). If the plan benefits are
determined in that manner, future periodic payments for a participant
who elects a retroactive annuity starting date will be the same as the
periodic payments that would have been paid to the participant had
payments actually commenced on the retroactive annuity starting date. In
addition, the participant must receive a make-up amount to reflect any
missed payments (with an appropriate adjustment for interest from the
date the payments would have been made to the date of actual payment).

Several commentators suggested that an adjustment for interest should
not be required where the period between the retroactive annuity
starting date and the date payments begin was less than three or four
months. It was argued that the requirement of an interest adjustment in
such a case may create burdens for the plan that are more significant
that the additional money that may be paid to the participant. The
Treasury Department and the IRS continue to believe that an appropriate
adjustment for interest is needed for make-up payments. Thus, the final
regulations retain the rule that an appropriate adjustment is required
for make-up payments. The extent to which an adjustment is appropriate
for a particular make-up payment depends on the facts and circumstances
related to that payment.

The final regulations retain the rules from the proposed regulations
that provide that the notice, consent, and election rules of section
417(a)(1), (2), and (3) apply to the retroactive payment of benefits but
with several modifications. These modifications generally reflect the
fact that the existing timing rules relating to notice and consent are
generally determined with reference to an annuity starting date that is
after the furnishing of the QJSA explanation by a period of up to 90
days.[^1] If legislation currently pending in Congress changing the
90-day QJSA election period to 180 days is enacted, it is anticipated
that the regulations will be modified to reflect that change.

The final regulations also retain the special spousal consent rule
provided for under the proposed regulations. Under this special rule,
the participant's spouse as of the time distributions actually commence
must consent to the retroactive annuity starting date election, if the
survivor payments under the retroactive annuity are less than under a
QJSA with an annuity starting date after the date the QJSA explanation
was provided. This special rule applies even if the form of benefit that
the participant elects as of the retroactive annuity starting date is a
QJSA. Thus, for example, where a QJSA that begins after the QJSA
explanation is furnished would provide \$1,000 monthly to the
participant with a survivor annuity of \$500 monthly to the spouse, and
a QJSA with a retroactive annuity starting date would provide \$900
monthly to the participant with a survivor annuity of \$450 monthly to
the spouse, together with a \$20,000 make-up payment to the participant,
the participant would be required to obtain the consent of the current
spouse in order to elect the retroactive annuity starting date. Spousal
consent would be required in this example because the spouse has a
statutory entitlement to a survivor benefit of at least \$500 per month
under a QJSA with a current annuity starting date.

Various comments were received regarding this spousal consent
requirement. For example, it was suggested that spousal consent should
not be required in the cases of short delay if the QJSA form is elected,
or where the survivor benefit under the retroactive annuity starting
date is at least 95% of the survivor annuity payable under a current
QJSA, because requiring consent in such a case would create additional
work and confusion and result in little benefit to the spouse. The
regulations are not changed in this regard, as the Treasury Department
and the IRS believe that spousal protection cannot be diminished below
the statutorily prescribed QJSA without spousal consent. However, these
regulations provide that such consent is only necessary where the
survivor annuity is less than 50% of the amount of the annuity payable
during the life of the participant under a currently commencing QJSA.
Thus, in the example provided above, if the participant elected a QJSA
with a retroactive annuity starting date and a 66 2/3% survivor annuity,
the QJSA would provide \$840 monthly to the participant with a survivor
annuity of \$560 to the participant's spouse and a make-up payment of
\$18,666. Spousal consent is not required in such a case because the
\$560 survivor annuity exceeds the minimum permissible under a currently
commencing QJSA.

The proposed regulations impose an additional condition on the
availability of a retroactive annuity starting date, regarding the
permissible amount of the distribution under sections 417(e)(3) (if
applicable) and 415. To satisfy this condition, the distribution must be
adjusted, if necessary, to satisfy the requirements of sections
417(e)(3) (if applicable) and 415 where the date the distribution
commences is substituted for the annuity starting date.

Several comments raised concerns regarding the requirement that sections
415 and 417(e)(3) be satisfied as of the date of distribution as well as
the retroactive annuity starting date. Some commentators suggested that
testing whether the distributions satisfy section 415 as of the date of
distribution could be particularly restrictive for multiemployer plans.
The commentators noted, for example, that for a participant who left
covered service under a multiemployer plan at age 60 and retires at age
68 under a plan with an age-62 normal retirement age, the amount payable
in the year of benefit commencement, as calculated for purposes of
section 415, could well be higher than 100% of that participant's
average compensation for his high three years and thus would violate
section 415.[^2]

The IRS and Treasury Department believe this second test is generally
needed to stop participants from using the retroactive annuity starting
date as a means of receiving benefits in excess of the section 415
limits. However, the IRS and Treasury Department have weighed the
importance of compliance with this requirement against the associated
burdens and have concluded that testing for section 415 compliance as of
the date distributions commence may not be needed in every case. Thus,
the final regulations do not apply the requirement that satisfaction of
the benefit limitations of section 415 be demonstrated as of the date
distributions commence in the case of a distribution that commences no
more than twelve months after the retroactive annuity starting date,
unless the form of benefit (as of the retroactive annuity starting date)
is a form of benefit subject to the valuation rules of section
417(e)(3). For example, in the case of a life annuity distribution,
compliance with section 415 need not be demonstrated as of the date of
distribution where that date is no more than twelve months after the
retroactive annuity starting date. However, if the distribution were a
single sum distribution, compliance with section 415 would need to be
tested as of the actual commencement date.

Some commentators also objected to the rule in the proposed regulation
that required the plan to comply with the valuation rules of section
417(e)(3) as of the date of distribution. The IRS and Treasury
Department continue to believe that a participant should not be
receiving a smaller lump sum through the election of a retroactive
annuity starting date than would be available for a current annuity
starting date. Accordingly, these regulations adopt the rules of the
proposed regulations regarding the requirements of section 417(e)(3)
with a clarification relating to the application of section 417(e)(3).
Under this clarification, in the case of a form of benefit that would
have been subject to section 417(e)(3) if distributions had commenced as
of the retroactive annuity starting date, the distribution pursuant to a
retroactive annuity starting date election must be no less than the
distribution produced by applying the applicable interest rate and the
applicable mortality table determined as of the date the distribution
commences to the annuity form that corresponds to the annuity form that
was used to determine the benefit amount as of the retroactive annuity
starting date. Thus, for example, if a distribution paid pursuant to an
election of a retroactive annuity starting date is a single-sum
distribution that is based on the present value of the straight life
annuity payable at normal retirement age, then the amount of the
distribution must be no less than the present value of the annuity
payable at normal retirement age, determined as of the distribution date
using the applicable mortality table and applicable interest rate that
apply as of the distribution date. Likewise, if a distribution paid
pursuant to an election of a retroactive annuity starting date is a
single-sum distribution that is based on the present value of the early
retirement annuity payable as of the retroactive annuity starting date,
then the amount of the distribution must be no less than the present
value of the early retirement annuity payable as of the distribution
date, determined as of the distribution date using the applicable
mortality table and applicable interest rate that apply as of the
distribution date.

The final regulations retain the rule of the proposed regulations that
the determination of whether the valuation rules of section 417(e)(3)
apply is based upon the benefit form as of the retroactive annuity
starting date. Accordingly, a distribution option that is a
non-decreasing benefit under §1.417(e)-1(d)(6) does not become subject
to the valuation rules of section 417(e)(3) merely because of the
make-up payments for the period between the retroactive annuity starting
date and the date distributions actually commence.

Similarly, the final regulations provide that annuity payments that
otherwise satisfy the requirements for a QJSA under section 417(b) will
not fail to be treated as a QJSA for purposes of section 415(b)(2)(B)
because a retroactive annuity starting date is elected and a make-up
payment is made. Further, to address concerns raised by commentators,
these regulations provide that plan distributions may be considered to
be a series of substantially equal periodic payments for purposes of
section 72(t)(2)(A)(iv) even though the plan distributes a make-up
payment to a participant who has elected a retroactive annuity starting
date.

One commentator suggested that make-up payments made pursuant to a
retroactive annuity starting date should be considered to be part of a
series of substantially equal periodic payments for purposes of the
eligible rollover distribution definition of section 402(c)(4)(A).
However, these regulations do not address this issue. Section
1.402(c)-2, Q&A-6 provides that an adjustment in a payment that is part
of a series of substantially equal periodic payments will be treated as
part of the series of substantially equal periodic payments for purposes
of section 402(c)(4)(A) where the adjustment was due solely to
reasonable administrative error or delay. To ensure that any rule
applicable to make-up payments under this regulation is consistent with
the rules generally applicable to independent payments under Q&A-6, the
IRS and Treasury Department anticipate reviewing these rules and issuing
guidance.

Two commentators suggested that defined contribution plans should be
allowed to adopt provisions for retroactive annuity starting dates. One
of these commentators suggests that the proposed regulations would
prohibit a defined contribution plan from making payments to cover
amounts that were unpaid due to an administrative oversight. This
commentator adds that such a prohibition may cause the plan to fail to
provide required distributions under section 401(a)(9). The IRS and
Treasury Department continue to believe that the rules applicable to
retroactive annuity starting dates are relevant only to defined benefit
plans because the benefit provided by a defined contribution plan is
equal to the account balance and the concerns addressed in these
regulations are generally not relevant in such a case. Moreover, the
problem raised by the commentator appears to relate to an administrative
delay in making a payment (which is an issue covered under §1.401(a)-20,
A-10(b)(3)), rather than the topic of these regulations. In any event, a
plan must provide all distributions required by section 401(a)(9) and
these regulations do not affect that requirement.

One commentator noted that some plans currently allow retroactive
annuity starting dates in reliance upon a good faith interpretation of
the statute and existing regulations. This commentator suggested that
some of the sponsors of these plans may not wish to provide retroactive
annuity starting dates in light of these regulations and requested that
the IRS and Treasury Department confirm that plan sponsors who currently
allow retroactive annuity starting dates will not violate the
anti-cutback rules of section 411(d)(6) if they choose to amend these
plans to restrict the availability of retroactive annuity starting dates
in the future. The issues raised in this comment are not addressed in
this Treasury decision. It is anticipated that such plan amendments will
be governed by regulations to be issued under section 411(d)(6) pursuant
to section 645 of the Economic Growth and Tax Relief Reconciliation Act
of 2001, Public Law 107-16 (115 Stat. 117).

**Special Analyses**

It has been determined that this Treasury decision is not a significant
regulatory action as defined in Executive Order 12866. Therefore, a
regulatory assessment is not required. It is hereby certified that these
regulations will not have a significant economic impact on a substantial
number of small entities. This certification is based on the fact that
the regulations require the collection of plan participants= written
elections requesting qualified retirement plan distributions, and
written spousal consent to these distributions, under limited
circumstances. It is anticipated that most small businesses affected by
these regulations will be sponsors of qualified retirement plans. Since
these written participant elections and written spousal consents are
required to be collected only for certain distributions, and since, in
the case of a small plan, there will be relatively few distributions per
year (and even fewer that are subject to these requirements), small
plans that provide distributions for which this collection of
information is required will only have to collect a small number of
participant elections and spousal consents as a result of these
regulations. Accordingly, a Regulatory Flexibility Analysis is not
required. Pursuant to section 7805(f) of the Internal Revenue Code, the
notice of proposed rulemaking preceding these regulations was submitted
to the Small Business Administration for comment on its impact on small
business.

**Drafting Information**

The principal authors of these regulations are Robert M. Walsh and Linda
S. F. Marshall, Office of Division Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities). However, other personnel from the IRS
and Treasury participated in their development.

**List of Subjects**

[26 CFR Part 1]{.underline}

Income taxes, Reporting and recordkeeping requirements.

[26 CFR Part 602]{.underline}

Reporting and recordkeeping requirements.

**Adoption of Amendments to the Regulations**

Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1\--INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read, in
part, as follows:

Authority: 26 U.S.C. 7805 \* \* \*

Section 1.417(e)-1(b)(3) also issued under 26 U.S.C. 417(a)(7)(A)(ii);
\* \* \*

Par. 2. Section 1.417(e)-1 is amended by:

> 1\. Revising paragraphs (b)(3)(i), (b)(3)(ii) introductory text, and
> (b)(3)(ii)(C).

2\. Redesignating paragraphs (b)(3)(iii) and (b)(3)(iv) as paragraphs
(b)(3)(viii) and (b)(3)(ix), respectively.

3\. Adding new paragraphs (b)(3)(iii) through (b)(3)(vii).

The additions and revisions read as follows:

[\'1.417(e)-1 Restrictions and valuations of distributions from plans
subject to sections 401(a)(11) and 417]{.underline}.

\* \* \* \* \*

(b)\* \* \* (1) \* \* \*

(3)\* \* \* (i) Written consent of the participant and the participant=s
spouse to the distribution must be made not more than 90 days before the
annuity starting date, and, except as otherwise provided in paragraphs
(b)(3)(iii) and (b)(3)(iv) of this section, no later than the annuity
starting date.

\(ii\) A plan must provide participants with the written explanation of
the QJSA required by section 417(a)(3) no less than 30 days and no more
than 90 days before the annuity starting date, except as provided in
paragraph (b)(3)(iv) of this section regarding retroactive annuity
starting dates. However, if the participant, after having received the
written explanation of the QJSA, affirmatively elects a form of
distribution and the spouse consents to that form of distribution (if
necessary), a plan will not fail to satisfy the requirements of section
417(a) merely because the written explanation was provided to the
participant less than 30 days before the annuity starting date, provided
that the following conditions are met:

\* \* \* \* \*

\(C\) The annuity starting date is after the date that the explanation
of the QJSA is provided to the participant.

\* \* \* \* \*

\(iii\) The plan may permit the annuity starting date to be before the
date that any affirmative distribution election is made by the
participant (and before the date that distribution is permitted to
commence under paragraph (b)(3)(ii)(D) of this section), provided that,
except as otherwise provided in paragraph (b)(3)(vii) of this section
regarding administrative delay, distributions commence not more than 90
days after the explanation of the QJSA is provided.

\(iv\) [Retroactive annuity starting dates]{.underline}. (A)
Notwithstanding the requirements of paragraphs (b)(3)(i) and (ii) of
this section, pursuant to section 417(a)(7), a defined benefit plan is
permitted to provide benefits based on a retroactive annuity starting
date if the requirements described in paragraph (b)(3)(v) of this
section are satisfied. A defined benefit plan is not required to provide
for retroactive annuity starting dates. If a plan does provide for a
retroactive annuity starting date, it may impose conditions on the
availability of a retroactive annuity starting date in addition to those
imposed by paragraph (b)(3)(v) of this section, provided that imposition
of those additional conditions does not violate any of the rules
applicable to qualified plans. For example, a plan that includes a
single sum payment as a benefit option may limit the election of a
retroactive annuity starting date to those participants who do not elect
the single sum payment. A defined contribution plan is not permitted to
have a retroactive annuity starting date.

\(B\) For purposes of this section, a Aretroactive annuity starting
date@ is an annuity starting date affirmatively elected by a participant
that occurs on or before the date the written explanation required by
section 417(a)(3) is provided to the participant. In order for a plan to
treat a participant as having elected a retroactive annuity starting
date, future periodic payments with respect to a participant who elects
a retroactive annuity starting date must be the same as the future
periodic payments, if any, that would have been paid with respect to the
participant had payments actually commenced on the retroactive annuity
starting date. The participant must receive a make-up payment to reflect
any missed payment or payments for the period from the retroactive
annuity starting date to the date of the actual make-up payment (with an
appropriate adjustment for interest from the date the missed payment or
payments would have been made to the date of the actual make-up
payment). Thus, the benefit determined as of the retroactive annuity
starting date must satisfy the requirements of sections 417(e)(3), if
applicable, and section 415 with the applicable interest rate and
applicable mortality table determined as of that date. Similarly, a
participant is not permitted to elect a retroactive annuity starting
date that precedes the date upon which the participant could have
otherwise started receiving benefits (e.g., in the case of an ongoing
plan, the earlier of the participant=s termination of employment or the
participant=s normal retirement age) under the terms of the plan in
effect as of the retroactive annuity starting date. A plan does not fail
to treat a participant as having elected a retroactive annuity starting
date as described in this paragraph (b)(3)(iv)(B) merely because the
distributions are adjusted to the extent necessary to satisfy the
requirements of paragraph (b)(3)(v)(B) and (C) of this section relating
to sections 415 and 417(e)(3).

\(C\) If the participant=s spouse as of the retroactive annuity starting
date would not be the participant=s spouse determined as if the date
distributions commence was the participant=s annuity starting date,
consent of that former spouse is not needed to waive the QJSA with
respect to the retroactive annuity starting date, unless otherwise
provided under a qualified domestic relations order (as defined in
section 414(p)).

\(D\) A distribution payable pursuant to a retroactive annuity starting
date election is treated as excepted from the present value requirements
of paragraph (d) of this section under paragraph (d)(6) of this section
if the distribution form would have been described in paragraph (d)(6)
of this section had the distribution actually commenced on the
retroactive annuity starting date. Similarly, annuity payments that
otherwise satisfy the requirements of a QJSA under section 417(b) will
not fail to be treated as a QJSA for purposes of section 415(b)(2)(B)
merely because a retroactive annuity starting date is elected and a
make-up payment is made. Also, for purposes of section 72(t)(2)(A)(iv),
a distribution that would otherwise be one of a series of substantially
equal periodic payments will be treated as one of a series of
substantially equal periodic payments notwithstanding the distribution
of a make-up payment provided for in paragraph (b)(3)(iv)(B) of this
section.

\(E\) The following example illustrates the application of paragraph
(b)(3)(iv)(D) of this section:

[Example]{.underline}. Under the terms of a defined benefit plan,
participant A is entitled to a QJSA with a monthly payment of \$1,500
beginning as of his annuity starting date. Due to administrative error,
the QJSA explanation is provided to A after the annuity starting date.
After receiving the QJSA explanation A elects a retroactive annuity
starting date. Pursuant to this election, A begins to receive a monthly
payment of \$1,500 and also receives a make-up payment of \$10,000.
Under these circumstances the monthly payments may be treated as a QJSA
for purposes of section 415(b)(2)(B). In addition, the monthly payments
of \$1,500 and the make-up payment of \$10,000 may be treated as part of
as series of substantially equal periodic payments for purpose of
section 72(t)(2)(A)(iv).

\(v\) [Requirements applicable to retroactive annuity starting
dates]{.underline}. A distribution is permitted to have a retroactive
annuity starting date with respect to a participant\'s benefit only if
the following requirements are met:

\(A\) The participant=s spouse (including an alternate payee who is
treated as the spouse under a qualified domestic relations order (QDRO),
as defined in section 414(p)), determined as if the date distributions
commence were the participant=s annuity starting date, consents to the
distribution in a manner that would satisfy the requirements of section
417(a)(2). The spousal consent requirement of this paragraph
(b)(3)(v)(A) is satisfied if such spouse consents to the distribution
under paragraph (b)(2)(i) of this section. The spousal consent
requirement of this paragraph (b)(3)(v)(A) does not apply if the amount
of such spouse=s survivor annuity payments under the retroactive annuity
starting date election is no less than the amount that the survivor
payments to such spouse would have been under an optional form of
benefit that would satisfy the requirements to be a QJSA under section
417(b) and that has an annuity starting date after the date that the
explanation was provided.

\(B\) The distribution (including appropriate interest adjustments)
provided based on the retroactive annuity starting date would satisfy
the requirements of section 415 if the date the distribution commences
is substituted for the annuity starting date for all purposes, including
for purposes of determining the applicable interest rate and the
applicable mortality table. However, in the case of a form of benefit
that would have been excepted from the present value requirements of
paragraph (d) of this section under paragraph (d)(6) of this section if
the distribution had actually commenced on the retroactive annuity
starting date, the requirement to apply section 415 as of the date
distribution commences set forth in this paragraph (b)(3)(v)(B) does not
apply if the date distribution commences is twelve months or less from
the retroactive annuity starting date.

\(C\) In the case of a form of benefit that would have been subject to
section 417(e)(3) and paragraph (d) of this section if distributions had
commenced as of the retroactive annuity starting date, the distribution
is no less than the benefit produced by applying the applicable interest
rate and the applicable mortality table determined as of the date the
distribution commences to the annuity form that corresponds to the
annuity form that was used to determine the benefit amount as of the
retroactive annuity starting date. Thus, for example, if a distribution
paid pursuant to an election of a retroactive annuity starting date is a
single-sum distribution that is based on the present value of the
straight life annuity payable at normal retirement age, then the amount
of the distribution must be no less than the present value of the
annuity payable at normal retirement age, determined as of the
distribution date using the applicable mortality table and applicable
interest rate that apply as of the distribution date. Likewise, if a
distribution paid pursuant to an election of a retroactive annuity
starting date is a single-sum distribution that is based on the present
value of the early retirement annuity payable as of the retroactive
annuity starting date, then the amount of the distribution must be no
less than the present value of the early retirement annuity payable as
of the distribution date, determined as of the distribution date using
the applicable mortality table and applicable interest rate that apply
as of the distribution date.

\(vi\) [Timing of notice and consent requirements in the case of
retroactive annuity starting dates]{.underline}. In the case of a
retroactive annuity starting date, the date of the first actual payment
of benefits based on the retroactive annuity starting date is
substituted for the annuity starting date for purposes of satisfying the
timing requirements for giving consent and providing an explanation of
the QJSA provided in paragraphs (b)(3)(i) and (ii) of this section,
except that the substitution does not apply for purposes of paragraph
(b)(3)(iii) of this section. Thus, the written explanation required by
section 417(a)(3)(A) must generally be provided no less than 30 days and
no more than 90 days before the date of the first payment of benefits
and the election to receive the distribution must be made after the
written explanation is provided and on or before the date of the first
payment. Similarly, the written explanation may also be provided less
than 30 days prior to the first payment of benefits if the requirements
of paragraph (b)(3)(ii) of this section would be satisfied if the date
of the first payment is substituted for the annuity starting date.

\(vii\) [Administrative delay]{.underline}. A plan will not fail to
satisfy the 90-day timing requirements of paragraphs (b)(3)(iii) and
(vi) of this section merely because, due solely to administrative delay,
a distribution commences more than 90 days after the written explanation
of the QJSA is provided to the participant.

\* \* \* \* \*

Part 602 -- OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Par. 3. The authority citation for part 602 continues to read as
follows:

Authority: 26 U.S.C. 7805.

Par. 4. In § 602.101, paragraph (b) is amended by adding the following
entry in numerical order to the table to read as follows:

[§ 602.101 OMB Control numbers]{.underline}.

> \* \* \* \* \*

\(b\) \* \* \*

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

CFR part or section where Current OMB

[identified and
described]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_[control
No.]{.underline}\_\_\_\_\_\_\_ \* \* \* \* \*

1.417(e)-1\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...1545-1724

[\* \* \* \*
\*]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

/s/ Robert E. Wenzel

> Deputy Commissioner for Services and Enforcement

Approved: July 9, 2003

/s/ Pamela Olson

> Assistant Secretary of the Treasury

[^1]: For example, section 417(a)(1) provides that a participant may
    elect to waive the QJSA within the Aapplicable election period@
    which is defined by section 417(a)(6) as the 90-day period ending on
    the annuity starting date. Similarly, \'1.417(e)-1(b)(3)(i) provides
    that the written consent of the plan participant and the
    participant=s spouse must be made no more than 90 days before the
    annuity starting date. Also, \'1.417(e)-1(b)(3)(ii) provides that
    the QJSA explanation must generally be provided no less than 30 days
    and no more than 90 days before the annuity starting date.

[^2]: After the comments relating to multiemployer plans were received,
    section 415(b)(11) was amended by the Economic Growth and Tax Relief
    Reconciliation Act of 2001, Public Law No. 107-16, to provide that
    the 100% test of section 415(b)(1)(B) no longer applies to
    multiemployer plans.