Terminating a one-life Defined Benefit plan

[Guest Carol the Writer]

I have recently been retained by 75-year old client who wants to terminate his defined benefit pension plan. He began drawing down his pension 10 years ago, so I do not think Required Minimum Distributions are an issue. (First of all, am I wrong about this?)

But my real question is this: once he terminates the plan, can he take a lump sum distribution and roll it over to his IRA? Or, since he has begun drawing down his pension, is the plan required to purchase an annuity for him? The latter does not make much sense. It will only make an annuity broker a lot of money. But is the client bound by the earlier benefit election, even though the plan terminates?

Any thoughts or ideas will be welcomed. Thanks!

[david rigby]

Will this work?

Amend the plan to permit lump sum distributions at NRD, even if still employed. (Might already be there.) Take that distribution, as a direct rollover. Freeze the plan so there are no more accruals. The result is a plan with no benefits, no assets, no participants. Then terminate it.

[jquazza]

What does the plan document say? If it doesn't say what you want, you can always amend it, no?