Administering Employee Deaths

All qualified plans must offer a preretirement survivor annuity (PRSA). Therefore, if an employee dies before retiring, there may be a benefit due to a surviving spouse. Depending on your plan, this may also apply when a terminated vested employee dies.

When an employee dies before retiring, first determine whether there is a benefit payable. To do this, run a calculation with the calculation reason Death. Depending on how you set up your system, the optional forms of payment results for this calculation include a joint and survivor form, where the survivor benefit is the death benefit.

If there is a benefit due, establish the beneficiary's payee record, enter the beneficiary's tax, direct deposit, and deduction information, then schedule the payments.

To use Pension Administration's automatic payment scheduling, you have to go though the same steps that you do when an employee retires: Create a payee record for the employee, select the appropriate optional form of payment, and schedule a payment (tax and direct deposit records are not necessary because there are no actual payments.) You can then schedule the beneficiary's payments, and the system automatically gets the beneficiary amount from the optional forms of payment results.