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Back in the '80s my wife and I knew a couple whose baby did a number of ads for P&G. The baby got paid really well for pictures of it being put into print ads. The parents said at the time it was the baby's college fund. I kept thinking 60+ years of compound interest in an IRA wow! Might not make sense for a company but might make sense for the 2 year old.

Belgarath: Asking the auditing firm if they have any problem with it presumes they will know what they're talking about. Unfortunately, I haven't found that to be the case with the majority of CPA firms. Since the two firms in the OP's example have a relationship, I'm not aware of any issue with it being considered a single plan

There is no right and no wrong answer. In some cases the lump sum will be significantly less valuable actuarially because it is usually the value of the age 65 benefit and may ignore subsidies available at early retirement. But then again, most of the plan that offer windows provide only a QPSA as a death benefit, so that there is a significant forfeiture at death (a total forfeiture for the unmarried)...the lump may be knocked down by the potential for forfeiture, but theres no chance you get zero. At the end of the day, normally the lump sum and the annuity have the same value using conservative assumptions. I believe most will take the lump sum because they are guaranteed to get "something" and that something is usually a LOT of money they dont want to end up with "nothing" they have concerns about the security of their pensions long term, if Detroit doesnt have to pay... they have concerns about the extent of the PBGC guarantee AT the end of the day, the lump sum is better if things go bad (short life, money crisis etc) and the annuity is better if things go good (long life, no crises etc) People arent worried about what happens when things go good