IRS Notice 2015-49, plan termination

[Belgarath]

This Notice seems to me to lack some clarity. My question is this:

Suppose you have a plan where the owner is over 70-1/2, and has therefore been taking his benefit as required under the RMD rules. Now the plan is being terminated.

Can he now receive his remaining benefit as a lump sum? The Notice doesn't seem to address this squarely, and it seems like it could be read t prohibit it, which is ridiculous. It also appears that the proposed regulations haven't even been issued? If not, can this notice trump existing regulations retroactively to 2015?

[david rigby]

IMHO, your premise (plan termination) is not one of the conditions being addressed by the Notice. See, for example, the fifth paragraph of the Background section. Then notice the first sentence of the next paragraph, which appears to be concerned with an ongoing plan.

Therefore, your lump sum payout on plan termination is not affected by this Notice.

But, if I've read it wrong, please let me know.

[Belgarath]

Thanks David, that makes sense. I was just worried that the last sentence in Section III might be applied very broadly, and it didn't make sense that it would apply in the situation I mentioned.

So you have brightened my day - thanks!

[Effen]

we have terminated plans post 2015-49 and offered lump sums to retirees. The IRS asked a few questions, but issued a determination letter without much trouble.

Be careful about paying out too many of your retirees, especially if you will need to purchase deferred annuities. It can be very difficult to place deferred annuities and if you don't have a lot of immediates to go with them, it can be almost impossible.