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Hopefully they aren't also staring at their 415 max lump sum on the other end of the calculations....

Everything you are saying is correct, but "good / bad" is all in the sponsors perspective. Larger plans see rising interest rates as "good" and are taking advantage of them by offering lump sum windows and buying annuities in an effort to de-risk the plans and shed liability. Annuity purchases and lump sum windows were at all time highs during 2022 and are still trending up in 2023. Smaller plans may see rising rates as bad for the reasons you suggest, but as David pointed out, the sponsor are not required to use 417(e) rates for lump sums and many small plans only use them for a floor. Part of the problem may be caused by the way the benefit has been explained to them. If they have been shown their 417(e) based PVAB every year, it needs to come with an explanation of how that can fluctuate. We typically never show the PVAB on benefit statements for just this reason. It is also the reason why cash balance plans have become so popular because they are insulated from this issue. This is one of those good "consulting opportunities". Sponsors should understand how their plans work, and if they don't like it, they generally have the opportunity to change it.

I'll jump in the deep end: when it is at 99 on the first day of the plan year. But most wouldn't file as a small plan that year if the likelihood is it would be back to a large filer within a year or two. The 80-120 rule is to help avoid audit whiplash.

Listen to Belgarath’s reasoning. Also, consider ERISA § 404(a)(1)(D)’s command to administer a plan according to the plan’s governing documents. If the plan’s documents provide a participant a right to take a distribution after severance from employment, one has a right (legally enforceable under ERISA § 502) to take the distribution the plan provides.

Peter - I just took a quick peek at how Relius sets up distribution definitions, and it's looking for a minimum age of years/months. I don't have a dummy plan to test it on, but that sounds like they'll simply add the number of months to the birthdate day number.

I assume that you intend to modify the plan document and not just ignore the spousal notice or consent requirement. If you have actual knowledge that the Participant has been recently divorced or that a QDROis in the works, you would be advised not to make any loans or distributions until the rights of the prospective Alternate Payee have been resolved. DSG

Are you sure there was a distribution from Plan Origin, followed by a rollover contribution into Plan Destination? Or might there have been a plan-to-plan transfer of assets and obligations? Also, Plan Destination’s administrator and trustee might evaluate whether the attorney had (and perhaps still might have) a charging lien regarding some claim the attorney might have helped perfect. The plan fiduciary should get its advice from a lawyer who is (i) independent of the to-be-paid attorney, and (ii) competent to spot and evaluate the many exclusive-benefit, prohibited-transaction, and other ERISA title I (if it governs either plan) and Internal Revenue Code issues. This is no advice to anyone. I mention it only as a possible variation, in some circumstances, against the general principle that an employee-benefit plan doesn’t pay another plan’s expenses.

They may be exempt, but consider whether they might want to get coverage anyway. No one ever thinks their co-owner will be dishonest, but what if they are? To me, it's a small price to pay for some reassurance.

I agree it can be removed. If the plan had annuity options, it could be done but would require some advance notice.

Without knowing all the intricate details of plan language, investments, procedures, etc., etc... In general terms, based on what you've said, I would allow the distributions. VCP approval could take a long time, and it isn't fair to these participants to suffer for an employer error. If you assume the IRS approves, and again, based on what you've said, I assume they will, then you are good anyway. If they don't approve, either you will have overpaid them what I assume will be an insignificant amount, or if the IRS says you have to deposit more for some reason, then you make an additional payment.

We just had a very obnoxious lawyer *(and no, I'm not lumping all lawyers together!) insist that the client had to immediately amend the plan for SECURE 2.0 RMD provisions. We politely told him to go pound sand.