Involuntary cash outs at annuity starting date

[Guest K.C.]

Let's say that a DC plan, in which the only form of payment is a lump sum, states that vested account balances of $1,000 or less will be cashed out as soon

as administratively practicable following termination. There are participants in the plan whose vested account balances exceeded $1,000 when they terminated

employment but, thanks to investment losses, now have vested account balances that are $1,000 or less. Can the employer now amend the plan to state that

vested account balances of $1,000 or less at the annuity starting date (the date of distribution because only form of payment is lump sum) will be automatically

cashed out as soon as administratively practicable following the annuity starting date and apply that rule to pay out these participants whose vested account

balances exceeded the cash out threshold when they terminated, but whose vested account balances do not exceed the cash out threshold now, without this violating

the anti-cutback rules?

Here is why I THINK this is permissible:

1.411(d)(4), Q&A 2(b)(2)(v) states that a plan amendment that provides for involuntary distributions that are permitted under 411(a)(11) and 417(e) do not

violate 411(d)(6)

417(e) states that a plan can provide for cash out of amounts not in excess of cash out threshold prior to annuity starting date

So if the annuity starting date is the date that distribution is made for a lump sum only plan, then it presumably would not be a 411(d)(6) violation to amend the

plan to provide for cash out distributions as soon as administratively practicable following the annuity starting date. Do you agree or disagree? (Note that

participants are 100% vested so no forfeitures occur when participants are cashed out.)

Thanks!

[Mike Preston]

Agreed.