IRS Ruling Provides New Impetus for Lump-Sum Pension Buyouts for Retirees, March 21, 2019

Mar. 21, 2019

The IRS has released a ruling that impacts whether pension plan sponsors are permitted to provide lump-sum distributions to plan participants who are already receiving plan benefits via regular annuity payments. The issue was whether, under the IRS required minimum distribution (RMD) rules, a lump-sum payment would constitute an impermissible increase in the payment amounts these participants were receiving. In 2015, the IRS reversed its previous stance allowing these lump-sum payments to participants in pay status and stated its intent to amend the RMD rules to prohibit these payment options. Now, the IRS has once again changed course and announced that, for the time being anyway, it is no longer planning to amend the RMD rules to prohibit lump-sum payments to pension plan participants already receiving annuity payments under the plan. For more information on lump sum pension buyout offers, visit Tax Facts Online.