1、Order Code RS22765December 3, 2007Lump-Sum Distributions Under the Pension Protection ActPatrick PurcellSpecialist in Income SecurityDomestic Social Policy DivisionSummaryThe Pension Protection Act of 2006 (PPA, P.L. 109-280) established new fundingrequirements for defined benefit pensions. The PPA
2、also modified the provisions offederal law that prescribe how the minimum permissible value of a lump-sumdistribution from a defined benefit plan will be determined in 2008 and thereafter. Italso established conditions under which payment of lump sums from defined benefitplans will be restricted. Th
3、is report summarizes the provisions of the PPA that affectlump sums paid from defined benefit pension plans. This report will not be updated.Employer-sponsored retirement plans are legally classified as either defined benefitplans or defined contribution plans. Defined benefit (DB) plans pay pension
4、s that areusually based on each workers years of service and average pay. DB pensions must offerparticipants the option to receive an annuity: a series of monthly payments guaranteed forlife. Some DB plans also offer participants the option of taking their accrued benefits aslump sums when they sepa
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