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Guest Bob_DB

Lump Sum Distribution Slipping into 2005

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I agree, we are beating a dead horse, but...

417(f)(2)(A) IN GENERAL. --The term "annuity starting date" means --

417(f)(2)(A)(ii) in the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the participant to such benefit.

Again, it's not MY definition. What do you have to back up your position?

Personally, I feel that if the lump sum is not paid before the end of the stability period, it needs to be recalculated due to the interest rate change. This is where it gets a little gray.... If the PA caused the payment delay, I generally recommend that the participant receives the greater of the two amounts (old rate, new rate). If the participant caused the delay, generally the new rate should be used, regardless of whether it would be an increase or decrease in the lump sum amount.

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For what its worth to the dead horse--

IRM 4.72.9.5.1 (03-01-2002):

"Reg. 1.401(a)-20, Q&A 10 defines annuity starting date as the first day of the first period for which an amount is payable under a qualified plan as an annuity, or in any other form. However, Notice 93-26, 1993-1 C.B. 308, permits a plan administrator to treat the date of distribution as the annuity starting date in the case of distributions that are not in the form of an annuity and that are also not subject to the survivor annuity requirements."

Notice 93-26:

"This notice clarifies that, for purposes of satisfying section 411(a)(11) and section 402(f), the plan administrator is permitted to treat the date of the distribution as the annuity starting date in the case of distributions that are not in the form of an annuity within the meaning of section 72 and that are also not subject to the requirements of section 401(a)(11)."

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Guest Harry O

Everett -

Notice 93-26 is not applicable here. We are talking about a DB plan; the Notice on its face only applies to plans that are not subject to the survivor annuity requirements.

Effen -

My authority is the regulation I cited earlier. Again, if the annuity starting date for a DB lump sum did not occur until the paperwork was submitted, there would be no need for the retroactive annuity starting date regs to discuss the "better of" section 417(e) calculation. It would be impossible to have a retroactive annuity starting date in such a case. This can't be the answer! I would think your practice of using the rate at distribution if the participant causes the delay is risky, especially if the interest rate has increased (depending on the facts of the situation and exactly what the plan document says about annuity starting dates, etc.).

We'll have to agree to disagree!

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Well I for one appreciate the opinions and comments. I don't think this is a dead horse at all. I still am not sure of the FINAL ANSWER and would welcome more discussion.

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Guest Harry O

Everett -

Sorry. I see your point now. Too many posts on this topic!!! (But an interesting discussion nonetheless . . .)

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