The Pension Benefit Guaranty Corporation (PBGC) published a final rule Nov. 18 that makes it easier for participants in 401(k) plans with rollover options to get lifetime income by moving their funds into traditional pensions.
The final rule clarified that benefits earned from a rollover generally would not be affected by PBGC's maximum guarantee limits. For a plan terminating in 2015, the agency's maximum guaranteed benefit for a 65-year-old retiree will be just over $60,000 a year.
Additionally, the final rule explains that rollover amounts generally would remain untouched by PBGC's five-year phase-in limits. The PBGC explains that normally, benefit increases from changes to a plan in the five years before it ends are partially guaranteed. Under the new proposal, these restrictions generally would not apply.
The PBGC said that the rule served to remove a fear that the amounts rolled over would suffer under guarantee limits should PBGC step in and pay benefits.
Other than including minor clarifications suggested by commenters, the final rules are identical to proposed rules on the topic that were issued in April.
