PPA Restrictions

[Andy the Actuary]

Available benefit if benefit distribution restrictions apply is lesser of 50% of lump sum or 100% of PBGC maximum. We have the following from our joyous August proposed IRS regulation:

(iv) Present value of PBGC maximum benefit guarantee. The amount described in this paragraph (d)(3)(iv) is, with respect to a participant, the present value . . .of the maximum benefit guarantee under section 4022 of the Employee Retirement Income Security Act of 1974, as amended.

Does this mean that a Plan not subject to Title IV (e.g., one-person plan) cannot pay a lump sum since there is no guarantee under ERISA or is this simply what the words say and not the intention, which is the reference to the PBGC maximum is simply a number that applies irrespective of whether the Plan is subject to PBGC coverage? Unless I overlooked it, I don't see where the proposed regulation states the latter.

[Mike Preston]

But it IS the latter.