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Prenuptial agreement can't waive qualified-plan spousal annuity.

Hurwitz, a participant in a qualified retirement plan, died while married to his third wife. The couple had entered into a prenuptial agreement in which each spouse waived all rights to the other's property.

Generally, qualified plans must provide for payment of a spousal survivor annuity. However, married plan participants can waive the survivor annuity, but only if the spouse consents to the waiver.

After Hurwitz's death, his son, who was named as the primary plan beneficiary, sued the wife. He asked the court for a determination that he was the sole beneficiary of the father's interest in the plan. He claimed the wife's signing of the prenuptial agreement was an effective consent to waive the spousal survivor annuity. A district court held for the spouse, ruling her consent did not meet the requirements of Internal Revenue Code section 417(a), which deals with waivers of spousal annuities. The district court said even if the prenuptial agreement met the statute's requirements, the consent would not have been effective because the parties were not married at the time of the agreement, and section 417 says the waiver must be by a "spouse." The district court relied on regulations section 1.401(a)-20, Q&A 28, which reaches the same conclusion.

The decision was appealed.

Result: For the spouse. The appellate court upheld the district court decision. Therefore, the plan must pay the annuity to the surviving spouse.

* Peter Hurwitz v. Joan Lear Sher, 982 F2nd 778 (2nd Cir., 12/28/92).
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Article Details
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jun 1, 1993
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