If a governmental defined benefit plan is terminating and wants to pay lump sums, are they subject to the 417(e) rates or can they pay at any reasonable rate?

My understanding is that govt. plans are exempt from IRC sections 401(a)(11) and 417. Also exmept from sec. 411. My conclusion is that they are exempt from the lump sum minimums under 417(e).

BYW, because they are also exempt from 411(d)(6), it may be possible for such a plan to modify its lump sum definition so that the amounts are decreased.

However, as Carol Calhoun reminds us often, there may be applicable state statute(s) that could affect either or both of these issues.

I'm curious, if the Plan is terminating, is the sponsor filing with the IRS for a determination letter?

Yes, we are going to file for a determination letter. We are considering adding that lump sums can be paid at the 30 year rate (GATT) plus 1%.