Lump-sum windows can present a “win-win” scenario for both defined benefit (DB) pension plan sponsors and participants. Sponsors can decrease their Pension Benefit Guaranty Corporation (PBGC) premiums by reducing the amount of participants within a plan. On the other side, participants in need of cash can benefit from a lump-sum payout.
Before implementing a lump-sum window, sponsors must first consider the various administrative aspects related to such an offering. The DB Digest article “Lump-sum windows: Administrative tips to consider” by Nicholas Pieper highlights these nine administrative tips that can help plan sponsors with the process.
• Identify the eligible population
• Clean up the data
• Seek legal counsel assistance
• Determine the duration of your window
• Set a manageable deadline
• Deliver an announcement mailing
• Anticipate participant inquiries
• Create the ultimate lump-sum window packet
• Prepare for special circumstances
To learn more about lump-sum windows, click here.