Recapture of AFTAP-restricted lump sum ?

[Guest DBPension]

I believe I have seen some conflicting info ....... can someone clarify please>

Assume 2008 AFTAP was 100%. Assume the 2009 AFTAP is certified on 7/1/09 as 70%, thereby limiting prospective benefit payouts to a 50% lump sum (or the PV PBGC Cap if applicable). Assume the participant takes the OTHER HALF as an annuity. Assume the AFTAP stays at 70% until year 2013 whereupon the AFTAP exceed 80% and the lump sum restriction ends.

Can the participant that retired in 2009 with half of his/her benefit as an annuity INSIST on being offered the PV of the balance of their annuity as a lump sum in 2013? Does the Plan have to specifically ALLOW this ? If allowed, which lump sum interest & mortality rates apply in the 2013 lump sum calc., the 2009 or 2013 year rates.

Thank you ..........

Also, in addition to IRS 436, can someone provide a link to the latest IRS guidance on the 2006 PPA, and more specifically on AFTAP calculations. More than one source or link is welcome ! (still learning).

[Effen]

You are getting conflicting information because no one really knows because there is no guidance from Treasury. Ultimately, it will be a document issue.

Here is a recent discussion what to pay

can someone provide a link to the latest IRS guidance on the 2006 PPA

Don't hold your breath...

The bulk of the proposed 430 and 436 Regs were released around 8/31/07. I don't have a free link for you, but someone else might.

[Andy the Actuary]

At the 2009 EA meeting, Jim Holland was clear that no IRS guidance was contemplated regarding the distribution of the restricted portion.

As Mr. Effen indicated, "document issue." It may be possible to set up an option for the participant to elect an annual distribution until a restriction no longer applies and then the remainder is paid.