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IRS Releases Proposed Regulations on Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options

February 08, 2012
The IRS released proposed regulations that would permit plans to pay part of a retirement benefit in the lump sum form and part as an annuity without having to apply the lump sum distribution interest and mortality rates to the entire benefit. Under current regulations, both portions of such a distribution are treated as a single optional form and must use the minimum rates under Code section 417(e)(3). The proposed regulations would allow the two distribution forms to be treated as two separate optional forms of benefit; the lump sum distribution would be subject to the present value requirements under Code section 417(e)(3) and the annuity form of benefit would be subject to the plan?ÇÖs regular conversion factors. Comments are due to the IRS by May 3, 2012. A copy of the proposed regulations can be found here.
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