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1.417(e)-1 Immediate Lump Sum Distribution


Guest aciepluch

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Guest aciepluch

Pension Plan currently permits alternate payees to elect an immediate, lum-sum distribution. Other forms of distribution, including various annuity options, are available at the earlier of participant's attainment of "earliest retirment age" under Section 414(p) or Participant's termination of employment.

1.417(e)-1(b) provides that a plan may not offer a paritcipant separating from service age age 45 an immediate lump-sum distribution or a QJSA commencing at normal retirement age. If it is going to offer an immediate lump-sum, it must also offer an immediate QJSA.

Under this logic, must the plan described above also offer an alternate payee an immediate annuity option?

Thanks!

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If the Alternate Payee is NOT treated as the participant’s current spouse by reason of the QDRO, then the QDRO must specify the amount of and how the participant’s benefit is to be distributed to an Alternate Payee. 1.401(a)-13(g)(4)

The QDRO can specify any distribution option that is available under the plan.

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From a logical perspective, the protection afforded a participant by the provision that requires an annuity option whenever a lump sum is also offered would seem to be something that is logical to provide to the alternate payee.

In the absence of some clear guidance to the contrary, I would think it unconscionable not to offer the annuity option to the alternate payee in a plan subject to the annuity rules.

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