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Guest Thornton

Lump sum distributions.

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Guest Thornton

Does anyone have, or know where to find, information concerning the percentage of DB plans that offer lump sum distribution options?

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Need more info.

My experience is that 100% of DB plans offer a lump sum, although most of these are the involuntary cashout rule (now $5000).

Also, the prevalence of lump sums of larger amounts (perhaps even without limit) is guided by many factors, such as nature of the industry (for example, I have seen many hospital plans with lump sum limits of $7000 to $10,000). The single most significant factor is the desire of the owner.

Is the DB plan sponsored by a sole owner, or possibly a family business? If so, much higher likelihood that the plan will include an unlimited lump sum option. Another factor might be the nature of the workforce; for example, a plan covering primarily attorneys or achitects.

Another factor is the management / owner philosphy and level of paternalism. If management is concerned that a blue collar workforce may squander lump sums, then the lump sum limit will be set low.

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Guest David Lipkin

To oversimplify, small plans typically offer lump sums and big plans do not.

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