Multiple lump sum windows

[fiona1]

Is there any guidance (official or unofficial) in terms of how many lump sum window offerings a plan sponsor can offer (and in what amount of time) before the IRS would deem the cash option a permanent plan feature?

[My 2 cents]

Nothing formal. Wouldn't there be diminishing returns - most of the people inclined to cash out would have done so, and most of the people who declined to cash out would probably tend to continue to do so. What you may experience would be heavy anti-selection. That is, of the people who would not cash out two years ago, anyone whose health has deteriorated would be among the few choosing to cash out now, leaving an unusually healthy cohort behind. Greater than normal longevity should perhaps be expected for those who have stayed behind.

there be before the sponsor's accountant decides that future windows should be built into the accounting calculations?

[fiona1]

Thanks for the feedback. I guess I was going more towards the protected benefit issues, and the regulations which say:

“if an employer establishes a pattern of repeated plan amendments providing for similar benefits in similar situations for substantially consecutive, limited periods of time, such benefits will be treated as provided under the terms of the plan, without regard to the limited periods of time, to the extent necessary to carry out the purposes of section 411(d)(6) and, where applicable, the definitely determinable requirement of section 401(a), including section 401(a)(25).”

I know that Rev. Ruling 92-66 says that this is based on the "facts and circumstances", so it's hard to say how multiple window amendments for a specific employer would be viewed without knowing details.

Since this lump sum de-risking has been popular for a few years now, I was just curious if anyone has dealt with situations in which an employer has wanted to offer it multiple times over a period of 2-3 years and whether anyone feels there is risk associated with that.