Andy the Actuary Posted April 22, 2009 Posted April 22, 2009 Plan's AFTAP is 100%. Participant age 55 can elect early retirement and either start pension or defer to later start date. The lump sum option is available. Question: Should election package disclose the risk of deferring the start date election that a full or any lump sum may not be distributable in a later year? The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
tymesup Posted April 22, 2009 Posted April 22, 2009 Is disclosure of this risk required? Probably not. Was the 401a4 High25 risk disclosed in the past? Probably not. Will this be the first participant who does not elect an immediate lump sum? Probably not.
Andy the Actuary Posted April 22, 2009 Author Posted April 22, 2009 Is disclosure of this risk required? Probably not.Was the 401a4 High25 risk disclosed in the past? Probably not. Will this be the first participant who does not elect an immediate lump sum? Probably not. Was not thinking about this from a requirement perspective. Rather, thinking about a disgruntled employee with an attorney creating a nuisance because you didn't tell him that by deferring, he might be relinquishing option to receive lump sum. The high 25 was at least (possibly) alluded to in the SPD. I agree a good job may not have in general been done in communicating this restriction. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
tymesup Posted April 23, 2009 Posted April 23, 2009 High 25 is not mentioned in our typical 23 page SPD, nor in our 3 page "Common Questions".
Andy the Actuary Posted April 23, 2009 Author Posted April 23, 2009 High 25 is not mentioned in our typical 23 page SPD, nor in our 3 page "Common Questions". I'm not an attorney so only poach upon the printed word but perhaps they should. See Reg. 2520-102-3(k)(1). The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
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