The IRS released a new notice earlier this month, which will allow defined benefit plan (DBP) sponsors to once again offer lump-sum buyouts to retirees who are receiving pension benefits. This practice of lump-sum buyouts was effectively halted in 2015  with the release of IRS Notice 2015-49. Prior to the 2015 IRS Notice, DBP’s regularly offered lump-sum buyouts to retirees in an effort to reduce their pension liabilities.  Lump-sum buyout’s are lucrative for the DBP’s but are often detrimental to retirees.  As stated in Forbes: “The idea of an employer-sponsored defined benefit pension plan is that you (and your spouse) get guaranteed payouts for life. As the plans became a drag on corporate balance sheets, companies started shedding pension liabilities by offering participants the option of taking a lump-sum buyout (cash) or transferring their pension to an insurer who would continue the lifetime payments. For retirees who say yes to the lump-sum offers, it wipes out federal protections of ERISA and turns lifetime retirement income into a one-time chunk that can easily be outlived.”

IRS Notice 2019-18 supersedes IRS Notice 2015-49.