411(d)(6)

[nancy]

Suppose a participant has an accrued benefit of $100/mo as of 1/1/03 when lump sums are eliminated. When the participant terminates 5 years later (1/1/08), may the plan offer him the choice of receiving the lump sum value of the $100 protected benefit or his accrued benefit as of 1/1/08? Or must you offer the lump sum value of the $100 plus any accruals after 1/1/03 as an annuity?

[david rigby]

Assuming this plan is covered by IRC 411(d)(6), the plan change at 1/1/03 to "eliminate" lump sums would apply to future accruals. Thus at subsequent severance of employment, the participant would have all plan optional forms at 12/31/02 available with respect to accruals at that date, and the revised set of optional forms applied to accruals after that date. However, close inspection of plan language is always appropriate.

A similar question:

http://www.benefitslink.com/boards/index.p...ST&f=22&t=19740

[MGB]

I don't think they may be offered a choice without opening up all accruals in the future to lump sum provisions and 411(d)6) protection. Now the plan could say that everyone that is a participant at the current amendment date will always have a lump sum on future accrued benefits available to them. Similarly, they could allow lump sums on new accruals in the future out to soome predetermined point in time.

But, under no conditions could the plan administrator have the discretion to offer the choice in the future.