IRS Sets Limits on Pension De-Risking


In July 2015, the IRS announced new regulations (Notice 2015-49) limiting a company’s ability to de-risk its pension liabilities by making lump sum distributions to participants in pay status. While lump-sum payments may be a cost effective way of de-risking pension obligations, they may not be the best thing for retirees. Taking away the lump sum option from the defined benefits plan sponsor will likely result in more de-risking transfers via annuities.