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Lump Sum Option for Current Retirees upon Plan Termination


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We would like to offer lump sums to current retirees upon the termination of the DB plan.  The PBGC has no issue with it but IRS Notice 2015-59 indicates that the IRS is going to publish retroactive regs which will eliminate the option under 1.401(a)(9)-6, A-13 to offer lump sums to current annuitants in the event of plan termination.  I've seen various articles which seem to indicate that they don't anticipate the IRS eliminating the lump sum options on plan termination but the notice appears to indicate otherwise.  Anyone have any recent experience with the IRS on this? 


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beartd, that's not what Notice 2015-59 is saying. No change contemplated to Q&A-13(a) permitting a change on plan termination, only clarify that Q&A-14 for increases in benefit cannot be used to permit lump sum windows for individuals in pay status for a non-terminating plan. Go back and read carefully the second to the last sentence of fifth paragraph of Section II of notice and compare that with first paragraph of Section III.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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