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Aon Hewitt Submits Comments on Proposed Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options Under Defined Benefit Pension Plans

On May 3, 2012, Aon Hewitt submitted comments to the Internal Revenue Service relating to proposed modifications to the minimum present value requirements for partial annuity distribution options under defined benefit pension plans. The proposed regulations were published in the February 3, 2012 Federal Register.

In the comment letter, Aon Hewitt indicated its support of the proposed clarification of the application of Internal Revenue Code Section 417(e) to “split” payment options (optional forms of benefit that are paid partly in the form of an annuity and partly in a more accelerated form) in defined benefit plans. Aon Hewitt provided comments regarding:

  • The proposed clarification of the minimum present value requirements under IRC Section 417(e);
  • A need for retroactive application of this clarification;
  • A need for interim guidance in advance of final regulations being issued; and
  • The final regulations including expanded examples of partial annuity distribution options, such as for plans with employee contributions.

The full comment letter is available below.

Aon Hewitt Submits Comments on Proposed Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options Under Defined Benefit Pension Plans