Lucky32 Posted January 25, 2024 Posted January 25, 2024 The sole participant (100% owner) in a DB plan was in dire need of $100k while still employed and was told by her TPA that the only way to get such a distribution would be for her to elect to immediately start receiving her benefit as a 30-year annuity. Although she was supposed to take $100k out of the plan every year due to this change, she only took $100k the first year and never took out any more. Is she able to now make another election to change this back to not having to receive distributions until she retires? The doc unfortunately doesn't address such a situation. It seems the annuity circumvents the requirement that DB plans can't make inservice distributions until the attainment of age 62, which the participant hasn't yet reached. As for the annual payouts after the 1st distribution that were not taken - would it be acceptable for her to be paid from the plan the missed distributions with interest at this time? Is any other option or correction/adjustment/reporting needed to fix all this, if it can be fixed?
CuseFan Posted January 26, 2024 Posted January 26, 2024 DBP could allow in-service commencement at age 59 1/2 but document had to provide. Also, there is no 30-year annuity - there could be 30-year installments if such period did not exceed life expectancy (or joint life). If the person was not 59 1/2 then you have operational defect, correction of which is restoration with interest. The "annuity" does not circumvent in-service restrictions. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
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