DB Plan Rollover

[waid10]

My company has a DB Plan and is thinking about terminating it. Is it permissible for employees to rollover their accrued DB benefit into a 401(k) Plan? Or must the accrued benefit be used to buy annuities on behalf of the participants?

If it can be rolled over into a DC plan, please point me in the direction of the ERISA or Treasury Regs that permit it.

Thanks.

[Guest Carol the Writer]

It is a matter of whether or not the DB plan allows for lump sums as an optional form of payment and, as well, whether the new plan allows for the receipt of rollover contributions. If both exist, I do not see a problem. But neither of those are mandatory for a retirement plan. So, check both plan documents.

[waid10]

By the way, it is a traditional DB pension plan...not a cash balance plan. I am not sure if that would change the answer.

Thanks for any help.

[masteff]

It is a matter of whether or not the DB plan allows for lump sums as an optional form of payment and, as well, whether the new plan allows for the receipt of rollover contributions. If both exist, I do not see a problem. But neither of those are mandatory for a retirement plan. So, check both plan documents.

waid10, the only thing I'd add to Carol's comments is to check (probably w/ your actuary) and confirm that the plan is sufficiently funded to payout that much in lump sums.