We have a DB plan that allows for lump sum distributions regardless of amount. On plan termination, can we simply pay out lump sums to everyone and not offer annuity purchases? On a related note, to determine sufficiency of assets, can we simply look at the lump sum present values of benefits, or do we have to see if it will cost more for annuity purchases?

Absolutely not.



I assume you mean for PBGC purposes. You need to know what is elected by the participant. If they elect an annuity, you use that cost. Otherwise use the lump sum. The whole point is you need to know if you have assets sufficient for benefit costs.