IRS PLRs Allow Lump-Sum Distributions After Lifetime Payouts Have Begun


August 7, 2012 – The IRS has issued two private letter rulings (PLRs) in which the IRS allows retired former employees receiving lifetime payouts from defined benefit (DB) plans to elect to receive lump-sum distributions. General Motors and Ford Motor Company are using the strategy to relieve their DB plans of future financial liability for those retirees who elect lump-sum distributions. One PLR grants a one-time election “window” not to exceed 60 days, the other a period from 60 to 90 days. These rulings are significant not only because they offer a portability option for retirees’ benefits to be moved to an IRA or another employer plan, but—ironically—because they run counter to the well-publicized efforts of Congress and regulatory agencies to promote and enable lifetime income options. PLR 201228045 and PLR 201228051 are found at the following URLs.



My Ascensus
Forgot Username or Password?