Distribution of Small Benefits, AFTAP<60%

[Andy the Actuary]

A DB plan distributes (a) non-consensual lump sums if the lump sum is less than $1,000 and (b) consensual lump sums if the lump sum >$1,000 and <=$5,000. Otherwise, the Plan does not offer lump sum payment. The 2011 AFTAP is certified as <60%. My understanding is that the Plan must distribute the lump sum in (a) but cannot distribute the benefit in a lump sum in (b).

Any disagreement?

[My 2 cents]

The text of WRERA specifies that the 436 restrictions do not apply in the case of benefits which could be distributed without participant consent in accordance with IRC Section 411(a)(11). In our opinion, this is independent of actual plan provisions, so even if the plan limits involuntary lump sums to $1,000, lump sums up to $5,000 may be made without regard to the plan's status under IRC Section 436 (just as lump sums up to $5,000 do not require spousal consent).

[Andy the Actuary]

Thank you!