411(d)(6)--Option to purchase annuity

[Dalai Pookah]

Documents have had an option to have an annuity contract be purchased.  These plans do not elect otherwise to have an annuity form of distribution.  Is this election option protected under §411(d)(6)?  I suspect it is, however, in the final analysis, it seems the same as a lump sum with the Participant buying an annuity.  The only difference is that with the option, the Plan would choose the annuity.

I know it can be removed for new Participants.  What is the risk for current Participants?  Ultimately, IMHO, it's a dumb option.

So my questions are :  1.  Is it protected under §411(d)(6)?
                                         2.  Does the election serve a positive purpose?

[Bird]

This can be removed from a plan that does not require an annuity option (i.e. it can generally be removed from a PS or PS/401(k), as long as pension money was not merged into said plan...and even then, can be removed from sources that don't require it).

I don't have a cite but I imagine someone else will...back in the day, we used to include all options with a "why not" attitude, but then they got locked in with...the passage of REA (?)...and then the IRS gave us an out, which we exercised liberally.

[Kevin C]

Cite is 1.411(d)-4 Q&A 2 (e).