According to regulations, under what condition must Section 401(k) plans offer automatic survivor benefits?

Section 401(k) plans must offer automatic survivor benefits under specific regulations, primarily intended to protect the financial interests of surviving spouses. When a participant in a 401(k) plan passes away, the default provision is that benefits should go to a surviving spouse, ensuring they receive financial support after the participant's death.

Automatic survivor benefits are required unless the participant elects a lump-sum distribution. If the participant chooses to take their benefits in a lump sum, it effectively means that the entire account balance is distributed at once, and there wouldn't be an ongoing benefit for a spouse. Thus, the regulatory framework is designed to ensure that there is a protection mechanism in place for spouses, unless they explicitly agree to an alternative distribution method.

This interpretation aligns with the employee retirement security regulations that aim to balance the benefits received by employees and their families, making it crucial to maintain this protective measure unless a clear alternative is chosen.