Revoking installment election allowed?

[Guest DeePA]

I have a plan that allows for installment payments or lump sum. Participant has chosen installment option (yuk..from administrative end!).

The participant has asked if they can reduce installments if they find that the amount they are getting is too much.

The corbel election form for distributions says that installmetn period can be accelerated, but says nothing about reduced? Therefore, I believe that it can not be reduced, probably to avoid the possibility of payouts beyond the life expectancy. However, do you know if there is anything in the regs that would allow reduction, as long as it is not extended beyond life expectancy?

What i'm getting at is that i'm not sure if this is true for all documents or if we could amend our document???

Thanks.

Dee

[Kirk Maldonado]

What does the plan say?

[WDIK]

What does the plan say?

Kirk:

I think you may be getting in a rut. For the month of June, 15.4% of your posts consist solely of the quoted phrase. This is up significantly from the months of April and May where only 4.3% of your posts consisted soley of the quoted phrase.

[Kirk Maldonado]

WDIK:

You are not only very observant, but very analytical.

I think that if I automatically posted "What does the plan say?" every time that there was a new posting, that would be an appropriate comment at least 50 to 75% of the time.

In fact, I wish that the Message Board were set up so that the person posting a new message would get that query before they could actually post the message.

I never ceased to be amazed at the number of people who post questions about their own plan document without first reading it. I simply can't understand why somebody would do that.

[Guest FormsRmylife]

To reply to the original question --

You probably do not want to amend the plan to permit the reduction of installments. 401(a)(9) compliance is a main point that I would not like to try to draft around, so is the triggering of the 10% penalty for anyone beginning installments before 59 1/2. You could amend to permit a lump sum distribution election for participants receiving installments (with spousal consent if this is a money purchase or a profit sharing that is subject to full QJSA rules). With a lump sum, the participant can go acquire an IRA and take a withdrawal out each year.

[RTK]

Dee, re your original question, my dc plans with installment option often permit a reduction in the amount of installments. 401(a)(9) is not an issue until rbd.

FormsRmylife, I have a number of J&S dc plans that permit the participant to change the amount or frequency of installments, including electing a lump sum payment, without spousal consent. These plans are specifically drafted to provide that the spousal consent for the election of the installment form of payment applies to the later election to change amount or frequency. The theory is that the spouse is consenting to a form of payment that permits the participant to change the amount or frequency of installments. On the other hand, some of my dc plans specifically require spousal consent for that election (as the plan sponsor wanted).