What Is a Qualified Joint and Survivor Annuity (QJSA)?

How Does a Qualified Joint and Survivor Annuity Work?

A QJSA is a component certain retirement plans include that provides a life annuity to the plan participant (employee) and a survivor annuity to the survivor (such as a spouse) after the participant dies. These payments usually are issued each month.

You can name a spouse or someone else as a QJSA beneficiary. If the beneficiary is a former spouse, child, or dependent, they’re technically treated as a surviving spouse under a qualified domestic relations order (QDRO). The amount QJSA pays the survivor ranges from 50% to 100% of the sum that was paid during the participant’s life.

Generally speaking, your QJSA payments start when you reach your plan’s retirement age, and they stop when the surviving spouse dies.

Plans That Include QJSAs

Under federal law, a qualified retirement plan, such as a defined benefit plan or money purchase plan, must offer QJSA benefits to all married participants.

A couple can opt for another form of benefits, though, including single-life, two-life, and fixed-period annuities. If you choose to waive your QJSA, you and your spouse typically need to do it within 90 days of your payments starting.

Signing Up for a QJSA

Generally speaking, qualifying retirement plans include a QJSA, so you don’t have to sign up for the plan since it’s already included. Your plan will send you a notice between 30 and 180 days before your plan starts. This notice will include: 

• The term’s plans and conditions
• What will happen if you waive the plan
• Details about the spouse or non-spouse beneficiary’s right to reject a waiver request by the plan participant
• Your right to revoke a waiver or election

QJSAs, Divorce, and Domestic Partnerships

However, if the participant and their spouse select a QJSA and their marriage ends within 12 months, by either a divorce or the death of the participant, the spouse might not be entitled to a monthly survivor benefit. In this situation, the marriage must have started and ended within the 12-month period before annuity payments were supposed to begin.

If a plan participant is unmarried (single or has a domestic partner), QJSA benefits don’t apply. Rather, you’d qualify for a single-life annuity, which makes regular payments while you’re alive. Under federal law, your benefit as an unmarried person is paid as a single-life annuity unless you pick an alternative. Companies are not required to, but they can choose to provide a QJSA or QPSA to a domestic partner.

Example of a Qualified Joint and Survivor Annuity

Let’s say a spouse’s payout for your QJSA is 50%, and your lifetime benefit is $500 a month. If you die before your spouse does, they’d receive $250 a month for the rest of their life. But if your spouse dies before you do, you will keep getting the $500-a-month lifetime payment.

Pros and Cons of Qualified Joint and Survivor Annuity

Pros Explained

• Guarantees lifetime payments for two people: A QJSA offers lifetime payments for the retirement plan’s participant and their spouse.
• May be subsidized by an employer: Some employers subsidize QJSAs, which means the amount your QJSA pays out is equal to the amount a single-life annuity. This is nice perk because, typically, a single-life annuity has a higher monthly payment than a QJSA since it’s only paying for one lifetime, not two.

Cons Explained

• Lump-sum payout typically requires spouse’s approval: Because QJSA benefits typically are paid out in regular increments (typically each month), a participant has to get their spouse’s consent to switch to a lump-sum payout. However, if the lump-sum value of the QJSA is less than $5,000, the retirement plan can pay the benefit as a lump sum without the participant’s consent.
• May provide lower payments than a single-life annuity: A surviving spouse might not receive the full amount of the QJSA benefits but, instead, might get only 50% or 75% of the benefits. Also, payments from a QJSA tend to be smaller than those for a single-life annuity because the QJSA covers two lives instead of a single life.

Alternatives to a Qualified Joint and Survivor Annuity

You have several alternatives to a QJSA:

• Single-life annuity: A single-life annuity provides retirement benefits for you and not a spouse or other beneficiary. These benefits stop when you die.
• Two-life annuity: A two-life annuity provides lifetime benefits to you and, after you die, to someone other than your spouse.
• Lump-sum payment: Instead of a series of benefits, a plan participant might opt out of a QJSA and instead get a one-time payout representing all of the proceeds from a retirement plan.
• Certain-and-continuous annuity: A certain-and-continuous annuity provides benefits for the rest of your life at an amount that’s lower than a single-life annuity. If you die within five, 10, or 15 years after the date when your benefits initially were available, your designated beneficiary will receive the benefits for the rest of the “certain” period. If you die after that period ends, the benefits stop.

Frequently Asked Questions (FAQs)