lump sum available only for part of benefit

[Guest meggie]

I have a situation where a grandfathered benefit under a DB plan may be paid out as a lump sum. I understand that participant consent (and spousal consent) are required if the value of the nonforfeitable accrued benefit (grandfathered plus future benefit accruals) is over the mandatory small benefit cash out limit (say 5,000). So what if the value of the benefit is 6,000, of which 4,000 is the grandfathered piece. Should the plan be able to cash out the addtional 2,000 to the participant even though the plan does not allow voluntary lump sums on that piece? Since participant and spousal consent was obtained for the grandfathered piece-it would make sense to do so because the residual value is less than 5,000.--but the problem I'm having is that there is no lump sum option under the plan, except for the grandfathered benefit.

Thanks for your help.

[david rigby]

That would be as specified in the plan. Competent drafting will already have included the answer to your question in the document itself.

If the plan is silent, the sponsor could amend the plan (either way for clarity), but consult competent ERISA attorney first to make sure no violation of 411(d)(6).