PBGC Proposes to Raise Benefit Amount Payable as a Lump Sum
FOR IMMEDIATE RELEASE
April 29, 1998
The Pension Benefit Guaranty Corporation (PBGC)today announced it intends to increase from $3,500 to $5,000 the maximum value of benefits that it will pay in the form of a single, lump-sum payment to participants in pension plans that have been terminated and taken over by the agency.
"This change gives people who have earned a small benefit the option of taking a lump sum before they reach retirement age," said PBGC Executive Director David M. Strauss. "We will continue to urge lump-sum recipients to save for their future by transferring the payments directly into another retirement plan such as an IRA."
The proposed amendment, in the April 30, 1998, Federal Register, is consistent with a similar change in the Taxpayer Relief Act of 1997 for private pension plans.
PBGC would make the one-time payment if the value of the benefit does not exceed $5,000. However, the participant would have the option of declining the lump-sum and receiving the benefit in the form of an annuity if the monthly benefit is equal to or greater than $25.
Generally, these changes would apply to benefit determinations issued by PBGC after the effective date of the final rule.
Comments on the proposed change must be received on or before June 1, 1998. Comments may be mailed or sent by Internet e-mail to email@example.com.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by some 42 million American workers and retirees participating in about 45,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
— ### —
PBGC No. 98-24