Is it rolloverable

[LIBERTYKID]

Defined benefit plan provides for a life annuity with 10 years certain which is selected by the retiree. Retiree dies after 8 years. Remaining amount (2 years worth of payments) is paid in a lump sum to nonspouse beneficiary (as permitted by the plan). Is such amount rolloverable and is 20 percent withholding required on the distribution?

[LIBERTYKID]

I answered my own question. Treasury reg. 1.402©-2 Q&A -5 says "no."

[david rigby]

OK, perhaps I'm having trouble with plain English today. Where in that reg do you get the "no"?

[LIBERTYKID]

Last sentence of subparagraph ©

"For example, subtantially equal periodic payments made unde a life annuity with a five-year term certain would not be an eligible rollover distribuiton even when paid after the death of the employee with three years remaining under the term certain."

[david rigby]

Yeah, but............

according to your original post, the plan paid a lump sum equivalent, not "substantially equal periodic payments".

[LIBERTYKID]

I am not sure if that makes a difference.

subparagraph (a)

Generally, whether a series of payments is a series of substantially equal periodic payments over a specified period is determined at the time payments begin ... without regard to contingencies or modifications that have not yet occurred.

And then there is the statement is subparagraph ©

However, a new determination is not made merely becuse, upon the death of the employees, the spouse or foremer spouse of the employee becomes the distributee.

[david rigby]

The referenced Q&A is focused on whether the remaining substantially equal payments get a different treatment. But there are no such payments, because the new payment form is an entirely different situation.