BenefitsLink logo
EmployeeBenefitsJobs logo
Get the BenefitsLink app for iPhone and iPad LinkedIn
Twitter
Facebook
Search the News


Featured Jobs
Senior Plan Administrator
Client Relationship Manager
Retirement Plan Services Administrator
Client Service Manager
Client Service Manager
Account Manager
Vice-President of Sales
Compliance Manager
Retirement Plan Administrator
Search all jobs
 

 
 
 

Jump to content


Photo

Death Benefits under PPA


  • Please log in to reply
5 replies to this topic

#1 rcline46

rcline46

    Registered User

  • Sitewide Moderator
  • 1,899 posts

Posted 09 January 2009 - 09:17 AM

Participant is not at early or normal retirement age, and dies. Plan has a death benefit equal to 100% of PVAB. Lump sum is permitted as a form of distribution. Plan has AFTAP of 73%. PVAB is in excess of $5000 (really about $33,000).

1. Spouse is beneficiary - I believe spousal options are annuity or 1/2 annuity and 1/2 lump sum.

2. Non-spousal beneficiary - (children, parents, estate or other) - I think lump sum must be paid.

I am interested in other opinions as I didn't catch this kind of detail in what I see in the regs.

Thanks all.

#2 Andy the Actuary

Andy the Actuary

    Registered User

  • Registered
  • 2,284 posts

Posted 09 January 2009 - 10:09 AM

A prohibited payment by any other name is still a prohibited payment. The Aug '07 proposed reg. considers a prohibited payment to a beneficiary to be a prohibited payment.
The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

#3 rcline46

rcline46

    Registered User

  • Sitewide Moderator
  • 1,899 posts

Posted 09 January 2009 - 10:29 AM

Andy, I can see 'forcing' an annuity payment to a child, parent, brother etc. I cannot see forcing an annuity payment to an estate. That means the estate could never be closed, how do you determine the 'age' of the estate, and if said annuity is distributed to multiple benes of the estate - or if there are NO benes of the estate, can you see the state getting an annuity?

It looks like another PPA pothole to me. Or maybe a sinkhole. Think maybe installments over 5 years would satisfy the rule?

#4 Andy the Actuary

Andy the Actuary

    Registered User

  • Registered
  • 2,284 posts

Posted 09 January 2009 - 10:48 AM

You and I are members of the same choir. It's simply our choir leader "sucks."

Again, I argue the fix is not to amend PPA but to scrap it.
The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

#5 tymesup

tymesup

    Registered User

  • Registered
  • 335 posts

Posted 12 January 2009 - 09:35 AM

One solution to this particular pothole would be to prohibit participants from dying.

#6 Andy the Actuary

Andy the Actuary

    Registered User

  • Registered
  • 2,284 posts

Posted 12 January 2009 - 09:45 AM

One solution to this particular pothole would be to prohibit participants from dying.

That's not farfetched at all. In fact, with economic conditions being what they are, the participant probably can't afford to stay dead for very long.
The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.