Restricted payout from a DB plan to the surviving spouse of a top 25 e

[JDuns]

For purposes of this question, an employee is not able to receive a lump sum payout because of 1.401(a)(4)-5(B) and plans to work until he dies. The plan provides that a surviving spouse may receive either the account balance converted to an annuity based on her life expectency or a lump sum.

Please confirm that the surviving spouse is also restricted from receiving a lump sum because she would be receiving a death benefit not funded by life insurance on behalf of a restricted employee.

Are there any options other than:

(1) take an annuity,

(2) provide a surety arrangement fro 125% of the lump sum amount pursuant to Rev. Rul. 92-76; or

(3) amend the plan to add a new distribution option that is an annuity with a cash refund feature.

Thank you for your thoughts!