Gary Posted June 13, 2000 Posted June 13, 2000 A plan does not provide a lump sum option, but pays lump sums < 5,000 using PBGC rates. The company is merged w/ another company into a new plan. The new plan allows for lump sums under GATT (includes lump sums > 5,000). Is it reasonable to require that for a participant that was in pre merged plan to say that his pension accrued at time of merger must preserve the PBGC rates for his lump sum (even though a lump sum was not an option, except for small pensions)?
Guest Posted June 14, 2000 Posted June 14, 2000 I think a participant can "say" anything he or she wants, but the surviving Plan has no legal obligation to grandfather any provisions that didn't exist. Since the surviving Plan now provides for a lump sum, which was not previously an option, it should be treated as a new benefit option. Therefore the provisions that only applied to lump sums 5,000. I could also argue that depending on the timing of the merger, there is no obligation to preserve the PBGC rates on lump sums of
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