If you have a small plan (fewer than 10 lives), not covered by PBGC, can the owner waive benefits in order to terminate? I seem to remember that the IRS only allowed this when there was coverage under PBGC. Is the answer any different if the employer is in bankruptcy proceedings?

I have never had the IRS question the owner reducing his lump sum so the NHCE can be paid their full amount. The IRS DOES require that the valuation NOT recognize this decrease for funding purposes but the actual distribution from the plan should be fine.