Can a DB participant change distribution option to lump sum after first annuity payment is made?

[Guest 1stoppop]

We have a participant in a DB plan who completed distribution forms for an annuity payout. The next day the payment was made. Four days later, participant requests a change to lump sum. Tax withholding has not yet been sent out, if amount is repaid, we could reverse the entry, but should we?

[Andy the Actuary]

What do plan, SPD, and election materials say?

[david rigby]

Be very careful about bending the rules here. In all likelihood, it would be incorrect to assume "no harm in changing" just because the tax withholding has not yet been sent out.

[David MacLennan]

Your document probably does not allow for a change in form of payment after commencement of benefits, as it would be unusual. You could amend the plan to allow for it, but remember that this provides a more valuable benefit because of "selection" by participants (e.g., participant gets fatal disease and wants a lump sum).

[Belgarath]

On a somewhat related question - if the participant is prevented from receiving a lump sum payment due to AFTAP being too low, so receives an annuity payment in the interim, and the AFTAP subsequently gets back up to where it needs to be, the participant should be able to receive a lump sum equivalent to the remaining benefit?

[AndyH]

Legal question: Did the spouse waive a QJSA in favor of a life annuity or other non QJSA and if so is a second waiver permitted relative to one Annuity Starting Date?