Our DB plan allows a lump-sum payout and does not prohibit rehire after retirement. Several of our retirement-age employees have recently expressed interest in retiring simply so they could collect their lump-sum distribution and then be rehired immediately. They don't wish to retire -- they just want the cash now.

I understand we would put the plan at risk for disqualification if there is not a complete separation from employment; therefore, we are looking at establishing criteria for rehire eligibility (e.g., 6-month wait) and are looking for information, guidance and reference material on designing/implementing rehire/retire criteria. We have discussed this with our DB consultant who suggested amending the plan to include criteria to dissuade false retirement. The only information I can find relates to retirees receiving annuity payments, not lump sum payments. I would like to get a feel for what other companies have done.

Thank you.

If the retirees are over age 62, you can implement a change to allow in-service distribution. If they are under age 62, then you need some legitimate way of determining separation from service. I don't practice labor law, so good luck.

See IRC 401(a)(36).
The plan's ERISA attorney can amend the plan for this. The plan's actuary can tell you the increase in funding cost, if any.

Apart from the remedies mentioned (allowing in-service distributions, e.g., at 65), the client should think long and hard and with benefit of legal counsel before engaging in what could be construed as a subterfuge.