IRS shuts lump-sum window for retirees already receiving benefits

IRS shuts lump-sum window for retirees already receiving benefits
Defined benefit plan sponsors can no longer replace annuity payments with lump-sum distributions to retirees and their beneficiaries.
JUL 01, 2015
Defined benefit plan sponsors can no longer replace annuity payments with lump-sum distributions to retirees and their beneficiaries, the IRS said Thursday. With the amendments applying as of July 9, “it definitely has an immediate impact,” especially for people about to draw benefits, David Levine, a principal at Groom Law Group in Washington, said in an interview. “It definitely restricts the lump-sum windows, which is consistent with all the regulatory agencies' focus on lifetime income rather than lump sums.” (More: A retirement plan from the guy who teaches retirement income planning) Further clarification is needed on how the rule change will affect terminated plans, he said. Hazel Bradford is a reporter at sister publication Pensions & Investments.

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