Sponsor of a small defined benefit plan wants to amend the plan to allow retirees in pay status to elect another optional method of distribution, provided that all necessary spousal consents are obtained. Does anyone perceive any problems with this proposed change?

I think the plan can be amended to do this. However, many actuaries (me included) would describe this as the opposite of common sense. It is the classic case of the “anti-selection”, where the participant has new information that was not available at the earlier date of retirement. The most likely scenario is that a retiree has either elected (1) a J&S and the spouse died first, or (2) the retiree thinks his life expectancy will be less than average and wants to elect a lump sum.

If the plan is amended to add this option, expect a net increase in the overall cost of the plan. Also, be careful of discrimination problems.