Installment Change

[DTH]

I have a terminated employee in a DC plan that requested $10,000 a year in installments. With actuarial assumption for earnings, the installment period is less than 10 years. (These also did not go beyond her life expectancy.) Each year the individual has been directly rolling over the $10,000 into an IRA. (Don't ask me why she doesn't roll the whole thing in.)

After 5 years, she has now requested the installment amount be reduced to $3,000 a year. My question is, are these still subtsantially equal payments attached to the first series of $10,000 a year installments? Treasury regulation 1.402©-2 Q&A 5© states that if the payments change so that subsequent payments are not equal to the prior payments, you would make a new determination.

If they are linked to the prior $10,000 yearly installments, the combined period would be over 10 years and not eligible for rollover. If they are not linked and a new determination is to be made, then the new series of $3,000 a year installment would be less than 10 year and eligible for rollover.

I have not been able to find any examples for this. I looked at Revenue Ruling 2002-62, which defines substantially equal payments, but this type of scenario is not described.

Thanks!