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[bird, first and foremost let me say that I learn more from your posts on this forum than from almost any other poster. but I do disagree with you here, and I think that this is kind of fun . So I'll say in the office "well Bird said... and he's sharp! ] I'm sorry but use of forfeitures should not be public policy. We're talking about a pimple on an elephant's but here as far as national policy goes, even as retirement plan policy goes.

Shame on you Bird! This is the dumbest position I've ever heard of! It's a classic example of a solution in search of a problem that just did not exist. The employees get the safe harbor contribution. That's the only thing that matters.

My view: Purchasing an annuity (as noted above, it must retain the distribution options and factors available under the plan) is the only option, unless she elects to be paid the lump sum equivalent of the benefit as defined by the plan (with spousal consent if the participant is married). Rollovers to IRAs without proper consent are impermissible if the benefit is worth more than $5,000. The annuity will cost more, but under no circumstances would she be entitled to the higher amount it would cost to purchase the annuity. The plan must define the benefit and also the lump sum equivalent thereof. Buy an irrevocable annuity to cover the benefit if the participant will not elect to receive the lump sum equivalent as defined by the plan. No election = default action. The participant has no authority to delay the distribution of benefits to complete the termination. If she is being offered an immediate lump sum, she should have the option to receive an immediate annuity, but if she will make no election and has not reached normal retirement age, it is a deferred annuity that should be purchased. As for the legal action, it is a free country, and you can't stop people from wasting their money on pointless lawsuits. In saying that, I am presuming that you have double checked the benefit calculations for that participant and are prepared to defend them in court.