rcline46

Death Benefits under PPA

6 posts in this topic

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.

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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.

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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?

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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.

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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.

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