415 DeMinimus 10k Benefit

[JAY21]

Struggling to think the following situation through. Client has father in DB plan and plan provides for the greater of (a) 10% of Average Mo. Comp (career avg.) or (b) the 10k Deminimus benefit allowed under IRC 415(b) (pro-rated for years of service less than 10). Standard Form of benefit is a 100% J&S. Since father's avg. comp is only 2k per year times a 10% benefit formula, the 415 10k deminimus benefit is the greater benefit. Father is over age 70.5 and has begun minimum required distributions with no formal election as to final form of benefit since still working, but now dies. Question, what is the death benefit available if the spouse does not want the J&S annuity benefit but rather wants a lump sum as allowed under the plan (but 415 may not allow it based on the 10k) ? I don't think the 10k deminimus benefit under IRC 415(b) has an ancillary death benefit feature available other than the J&S if this is the standard form of payment (which it is), so I'm thinking if the spouse does not take the 10k as a continuing J&S benefit the death benefit available for a lump sum option could only be based on the regular 10% benefit formula using actual comp paid ($2,000 * 10% x 2 YOS/P). Any thoughts ?

[SoCalActuary]

So the spouse does not want $10k yearly income as a survivor benefit, but rather wants the lump sum.

$400 annual benefit from your example can't be worth even $5,000 lump sum single value.

It sounds like she needs to have the options explained to her, presumably with the owner (her child) to help her.

No, I do not see any way for her to get the lump sum value of $10,000 annual benefit.