The IRS reversed its previous position that prohibited defined benefit plan sponsors from offering lump payments to terminated participants currently receiving annuity payments. The IRS announced in Notice 2019-18 that until further guidance is issued it will not assert that a plan amendment providing for a retiree lump sum window program violates Section 401(a)(9) of the Internal Revenue Code. The Notice also provides that the IRS will evaluate the plan amendment to ensure it satisfies the relevant provisions of the Code.
Based on this latest development, it appears plan sponsors can offer retiree lump sum windows as a de-risking strategy.
KMK Law articles and blog posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. The laws/regulations and interpretations thereof are evolving and subject to change. Although we will attempt to update articles/blog posts for material changes, the article/post may not reflect changes in laws/regulations or guidance issued after the date the article/post was published. Please consult with counsel of your choice regarding any specific questions you may have.
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PartnerJohn Meisenhelder has extensive experience providing counsel to medium and large size companies (tax-exempt and for-profit) with respect to all employee benefits, executive compensation and privacy matters. John ...
PartnerLisa Wintersheimer Michel is the leader of the Employee Benefits & Executive Compensation Group. Her practice primarily involves all aspects of qualified retirement plans, including profit sharing plans, 401(k) plans ...
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