Effect of IRS Notice 2015-49

This is related to an earlier post, but a somewhat more targeted question. I'd love to hear opinions from the DB experts here.

The question is this: Prior to Notice 2015-49 (the "de-risking Notice"), the RMD regulations under 1.401(a)(9)-6, Q&A 13 and Q&A-14, provided for certain allowable accelerations/modifications. For example, retirement after the annuity starting date, or plan termination. Within certain limits, a lump sum was allowable.

The question is whether these exceptions are still allowable in a situation where someone is taking RMD's but has not yet retired, or for plan termination. It appears from section III of the Notice that the removal of these exceptions is only for situations where there is an AMENDMENT to the plan that previously, under 1.401(a)(9)-6, Q&A-14(a)(4), would have allowed an acceleration. But the exceptions in Q&A-13 still exist for "normal" non-amendment situations. Agree/disagree? Thanks!

My opinion would be that you can still change your election upon plan termination, or change of employment status.  We have terminated several plans post 15-49, offering lump sums to retirees, and didn't have any problems with the IRS or PBGC.  (Yes, some of those were audited by the PBGC post termination.)

It does need to be in your document, and you should always work through ERISA counsel.

Muchas Gracias!!

Agree with the ability to commute upon plan termination.  But I thought the cited reference made it clear that change of employment status doesn't provide such flexibility unless modification is available without change in status (such as would be the case if the initial form of distribution was an installment).

You can allow a change if you have a new annuity starting date that is based on the employee's actual retirement post commencement of RMDs, but the plan needs to allow for new ASD.