Is an involuntary cash-out provision a protected distribution option?

[Guest Grumpy455]

A DB plan provides that if the present value of a participant's vested accrued benefit does not exceed $5,000, then his/her benefit shall be paid as a lump sum distribution; otherwise the participant's benefit is paid as an annuity (the DB plan does not permit lump sum payments other than cash-outs). Even though this is not a distribution option (i.e., the participant cannot elect this form of distribution from a menu of distribution options), can the DB plan remove the cash-out provision without violating the 411(d)(6) anti-cutback rules?

[Belgarath]

It can be removed. See IRS Notice 2005-5, Q&A-12.

[Guest Grumpy455]

Thanks!