Historically, lump sum distributions, which allow plan participants to exchange receiving periodic annuity payments for a single lump sum payout, have been offered to participants only upon separation from active employment. The announcement follows a recent trend by plan sponsors to provide a one-time lump sum offer to former employees who have not yet commenced an annuity payment (so-called “terminated vested” participants).
Although some industry experts have historically questioned the ability of plan sponsors to offer lump sum payments to retirees,
“This development could have far-reaching implications for both plan sponsors and plan participants. For plan sponsors, the ability to provide a retiree lump sum offer provides greater flexibility to manage their retirement plans, including the ability to better manage the size of the plan relative to ongoing operations, as well as the ability to more efficiently administer the plan on an ongoing basis,” said
|Copyright:||Copyright Business Wire 2012|
|Source:||Business Wire, Inc.|