Lump sum calculation

[Guest DBStudentAct]

I have a single owner-participant DB plan that terminated in December 2008.

Somehow the benefits were not distributed and now the client intends to take a distribution prior to 12/31/2010.

The lump sum that was calculated at 12/1/2008 was much higher than current one valued at 12/1/2010 due to change in interest rates.

But does this not lead to reduction in benefits (anti-cutback) that client was eligible to collect on plan termination?

Should this benefit be the lower one since distribution is occuring now or should it be the greater of the two?

Thanks in advance for all replies.

[Effen]

The current lump sum can definitely be lower than it was in the past.

Even with interest rate changes, I would be surprised if the amount was significantly lower than it was two years ago. Can you be more specific about what rates were being used in 2008 and what rates are being used today? Also, what is the person’s age?

Is 415 an issue?

[david rigby]

The right to receive a lump sum is protected. The lump sum amount is not.

Anti-cutback protection applies to the accrued benefit, defined in ERISA (and the plan) as an annuity commencing at normal retirement age.

Effen's comment about 415 is spot-on: for a one-participant plan, assuming 415 is not a factor, is there reason to believe that the actual lump sum will be something other than the actual value of the assets?