The following is a summary of an important tax development that has occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Final regulations encourage partial annuity option for pension plan payouts. Defined benefit (pension) plan participants are often confronted with a “cash or annuity” decision upon retirement. But, many employees may prefer a combination of options, for example, the payment of some benefit as a stream of income for life (to provide protection against the risk of outliving one’s savings) and the rest of the benefit as a lump sum (to provide for liquidity). New final regulations allow defined benefit plans to simplify the treatment of certain optional forms of benefit that are paid partly in the form of an annuity and partly in a more accelerated form. The final regulations simplify the calculation of split benefits, making it easier for retirees to choose to receive part of their benefits as a lifetime stream of income.