What must a qualified plan state about payment methods? - ANSWER Available payment
methods, either mandatory or subject to participant/beneficiary election.
Who cannot choose the form of payment in a qualified plan? - ANSWER Employer, fiduci-
ary, or third party.
What is a lump-sum payment? - ANSWER A single sum payment of the vested account
balance.
How is a lump sum determined in a defined contribution plan? - ANSWER Based on the
vested account balance as of the plan's valuation date.
How often are most defined contribution plan accounts valued? - ANSWER Daily.
What is an annuity distribution? - ANSWER A guaranteed payment for one or two life-
times.
What is a single life annuity? - ANSWER An annuity paid over the participant's or benefi-
ciary's lifetime.
What is a joint and survivor annuity? - ANSWER An annuity paid over the participant's
and surviving beneficiary's lifetimes.
How are annuity payments typically made? - ANSWER Level payments on a regular basis
(e.g., monthly, quarterly, annually).
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, Why can't a defined contribution plan pay an annuity directly? - ANSWER Due to invest-
ment fluctuations, it cannot guarantee payments.
How does a defined contribution plan provide an annuity? - ANSWER By purchasing a
nontransferable annuity contract from an insurance company.
What is a nontransferable annuity contract? - ANSWER An annuity that cannot be sold or
transferred after distribution.
What is an annuity with a term certain feature? - ANSWER Guaranteed payments for a
specified period, even if the participant dies early.
What is an installment distribution? - ANSWER Periodic payments over a specified period
or life expectancy.
How does an installment distribution differ from an annuity? - ANSWER It is not guaran-
teed for a lifetime and stops after the specified period.
What tables are used for installment distribution life expectancy? - ANSWER Tables in
Treas. Reg. §1.401(a)(9)-9.
How can installment payments be structured in a defined contribution plan? - ANSWER
As a fixed dollar amount per period until the account is depleted.
What is a partial distribution? - ANSWER A distribution of only part of the participant's
vested benefit.
How is a partial lump-sum distribution calculated? - ANSWER As a portion of the vested
account balance, like a full lump-sum.
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methods, either mandatory or subject to participant/beneficiary election.
Who cannot choose the form of payment in a qualified plan? - ANSWER Employer, fiduci-
ary, or third party.
What is a lump-sum payment? - ANSWER A single sum payment of the vested account
balance.
How is a lump sum determined in a defined contribution plan? - ANSWER Based on the
vested account balance as of the plan's valuation date.
How often are most defined contribution plan accounts valued? - ANSWER Daily.
What is an annuity distribution? - ANSWER A guaranteed payment for one or two life-
times.
What is a single life annuity? - ANSWER An annuity paid over the participant's or benefi-
ciary's lifetime.
What is a joint and survivor annuity? - ANSWER An annuity paid over the participant's
and surviving beneficiary's lifetimes.
How are annuity payments typically made? - ANSWER Level payments on a regular basis
(e.g., monthly, quarterly, annually).
1
, Why can't a defined contribution plan pay an annuity directly? - ANSWER Due to invest-
ment fluctuations, it cannot guarantee payments.
How does a defined contribution plan provide an annuity? - ANSWER By purchasing a
nontransferable annuity contract from an insurance company.
What is a nontransferable annuity contract? - ANSWER An annuity that cannot be sold or
transferred after distribution.
What is an annuity with a term certain feature? - ANSWER Guaranteed payments for a
specified period, even if the participant dies early.
What is an installment distribution? - ANSWER Periodic payments over a specified period
or life expectancy.
How does an installment distribution differ from an annuity? - ANSWER It is not guaran-
teed for a lifetime and stops after the specified period.
What tables are used for installment distribution life expectancy? - ANSWER Tables in
Treas. Reg. §1.401(a)(9)-9.
How can installment payments be structured in a defined contribution plan? - ANSWER
As a fixed dollar amount per period until the account is depleted.
What is a partial distribution? - ANSWER A distribution of only part of the participant's
vested benefit.
How is a partial lump-sum distribution calculated? - ANSWER As a portion of the vested
account balance, like a full lump-sum.
2
