Understanding Death Coverage Reductions

All qualified plans must offer employees a death benefit in case of preretirement death. The amount of the benefit depends on when the participant dies. Plans can also pass the cost of this coverage to the employee through a reduced benefit upon benefit commencement. The death coverage reduction factor is typically based on the amount of time the coverage was in effect.

Employees who don't want to pay for the coverage can choose to waive it. Employees can also change their election over time. By recording an employee's history of coverage elections in your PeopleSoft system, you make this information available for determining the death coverage factor.