Annuity distribution from DC plans

[RCK]

We have acquired two separate DC plans that both have QJSA language, and for whom we have participants facing MRD requirements. For what its worth, one plan is a Money Purchase Pan and the other is a Profit Sharing plan that was created as an offset to a defined benefit plan. So my understanding is that if we have not gotten (cannot get) an affirmative election from the participant (and spousal consent if married), then we have to make the distribution as a life annuity or a QJSA.

So the question is where we get an annuity vendor to provide a monthly annuity benefit where the premium or lump sum at distribution date is less than $2,000. Our search has trund up terminal funding annuity providers, but generally with a $10,000 mimimum payment.

I guess in the interests of full disclosure I have to say that we deal with this issue on a daily basis, but we can get participant and /or spouse consent in that situation.

Ideas?

[J Simmons]

Does the plan document really provide that the normal form of benefit (the one if consent to another form is not provided) is QJSA for benefits with a present value of $5,000 or less?

[RCK]

Does the plan document really provide that the normal form of benefit (the one if consent to another form is not provided) is QJSA for benefits with a present value of $5,000 or less?

Yup. That's the normal form from the top all the way to $1,000

[Bird]

If you are simply facing the need to provide an RMD, I don't believe that you have to initiate an annuity form of distribution. Just pay the RMD.

[david rigby]

Pardon my ignorance, but isn't there regulatory clarification that you can amend the plan to utilize the $5,000 cash-out minimum?