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Terminating plan with J&S - missing participants


LMD1

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Not really familiar with the fine-tuning of the rules, but would the criterion be whether, if ANY of the participant's benefit is subject to J&S, all of the participant's account would have to be under $5,000 to be exempt from having to buy an annuity?  And would it be mandatory, in the absence of participant and spousal consent to the contrary, to buy an annuity covering both MPP and non-MPP account balances, if the total was over $5,000?

Unlike the situation in a DB plan, however, where the annuity must cover the plan benefit (however much more than a lump sum payout the annuity would cost), wouldn't buying an annuity for a MPP benefit be that you only need to buy an annuity that costs the same as the account balance?  If the lump sum option in a DB plan would pay $10,000 but the annuity would cost $15,000, then if there is no acceptance of the lump sum, the employer must spend $15,000.  If the total account balance in the defined contribution plan is $10,000 and an annuity must be purchased, would you not buy an annuity that costs $10,000?

Always check with your actuary first!

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