To facilitate the payment of benefits from a defined benefit pension plan partly in the form of an annuity and partly as a single sum, Treasury and the IRS amended the regulations under Section 417(e) to make this approach simpler to apply. This was done to encourage plan sponsors that include single-sum distribution options to offer participants the option to secure financial protection against unexpected longevity by receiving a portion of their benefits in an annuity form, while at the same time increasing liquidity during retirement by receiving a single-sum distribution.
In Notice 2017-44, the IRS provides model amendments that plan sponsors may use to amend plans to offer the bifurcated benefit distribution options in accordance with the regulations.
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