DB to DC Plan Transfers: DB Plan Termination Distribution Option Deferrals/Contributions in Top Heavy Ratio (Posted December 22, 1999) Technical Tip 19: The following question and answer appeared in "The Gray Book" (Questions to IRS/Treasury and Summary of Their Responses) from the 1996 Enrolled Actuaries Meeting: A DB plan without a lump sum option is being terminated. The plan sponsor wants to add a one-time option at plan termination permitting every participant (with spousal consent, if married) to elect to transfer the present value of his/her accrued benefit to the employer's DC plan, without retaining any of the DB's plan's annuity options once the money arrives in the DC plan. Annuities would be purchased for participants not electing this option, in accordance with the existing plan provisions. Can such an optional form be added at plan termination without also offering a regular lump sum option? Would such a transaction be a direct rollover or a plan-to-plan transfer? Must every participant entitled to this option also be offered an immediate QJSA, or can the existing plan provisions be retained that forbid annuity commencements before age 55? Would amounts transferred to the DC plan no longer be subject to the QJSA requirements? IRS Response: Yes. The transaction could be structured in either way. For instance, employee after-tax contributions cannot be rolled over, but can be included in a plan-to-plan transfer. It is necessary to offer an immediate QJSA from the DB plan in order for a transfer to be made. Amounts transferred to the DC plan would no longer be subject to the QJSA requirements. View all Tips © 1999-2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.