Lauren0507 Posted December 31, 2019 Share Posted December 31, 2019 A defined contribution plan currently provides that death benefits must be paid out over 5 years generally, but allows for extended payments to a participant's spouse. The client wants to remove extended payments and apply the 5 year rule to all beneficiaries, including the spouse. The plan does not allow annuity distributions. Are the extended payments protected or may they be eliminated as an optional form of benefit? Link to comment Share on other sites More sharing options...
Mike Preston Posted December 31, 2019 Share Posted December 31, 2019 Death benefits, as a rule, are not protected. Optional forms, as a rule, are protected. However, the rules regarding protection of optional forms allow elimination of an optional form if the remaining optional forms provide for essentially the same optional form with all of the benefits paid out over a shorter period of time. So, while I'd check the reg to be sure, my guess is that the client can accomplish what they want. Link to comment Share on other sites More sharing options...
Luke Bailey Posted December 31, 2019 Share Posted December 31, 2019 Lauren057, it's been a while since I had to look hard at this issue, but I think you're under 1.411(d)-4, Q&A-2(e), in which case you can do what you want, but only if you offer the surviving spouse a lump sum on the first date that he or she could otherwise receive the first of the "extended payments." Check out the reg. Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034 Link to comment Share on other sites More sharing options...
Lauren0507 Posted January 2, 2020 Author Share Posted January 2, 2020 Thanks so much for the responses. Happy New Year! Link to comment Share on other sites More sharing options...
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