Lump-Sum Distributions Under the Pension Protection Act

Abstract

The Pension Protection Act of 2006 (PPA, P.L. 109-280) established new funding requirements for defined benefit pensions. The PPA also modified the provisions of federal law that prescribe how the minimum permissible value of a lump-sum distribution from a defined benefit plan will be determined in 2008 and thereafter. It also established conditions under which payment of lump sums from defined benefit plans will be restricted. This report summarizes the provisions of the PPA that affect lump sums paid from defined benefit pension plans. This report will not be updated.