Recently released IRS Notice 2015-49 will prohibit U.S. pension plan sponsors from offering lump sum payments to existing pensioners. Thus, for example, if an employer is going to do a lump sum “window”, existing pensioners could not be offered a lump sum. Nevertheless, it does appear that lump sums can still be offered to pensioners upon a plan termination.
The Notice has a July 9, 2015 effective date. The Notice has some complicated grandfathering rules that can apply for plan amendments adopted before July 9, 2015, and some similar situations.