Lump Sum and Annuity

[Dougsbpc]

Small traditional Defined Benefit plan will terminate in about 4 months.

The plan document contains an alternate form of benefit choice of "Single sum distribution of a portion of the vested accrued benefit". This is not further described in the document.

This seems to indicate the plan could offer an alternate form of benefit that would allow a distribution of a portion of a benefit paid in the form of a lump sum and the remaining portion paid in the form of an annuity.

We have never had a plan sponsor want to offer this.

Is this possible?

Thanks.

[SoCalActuary]

Your document allows it. Why not?

I had some of these way back in 1985, when someone took 30% as J&S, 30% as 10 CC, and 40% as lump sum.

[david rigby]

What a mess.

I agree with SoCal, but caution you to look for other docuemtnatino (precedent, administrative interpretation) that might help decide whether "portion" has any reasonable limitations on its definition.

[frizzyguy]

The Corbell DB VS document allows for installments. What a nightmare but it's there. On the DB VS document, they recieved and opinion letter which I would assume means it's allowed.