Life annuities. (A) In general. The entitlement to a life annuity is treated as the entitlement to a single payment. Accordingly, an election to delay pay- ment of a life annuity, or to change the form of payment of a life annuity, must be made at least 12 months before the scheduled commencement of the life annuity, and must defer the pay- ment for a period of not less than five years from the originally scheduled commencement of the life annuity. For purposes of § 1.409A–1, this section, and §§ 1.409A–3 through 1.409A–6, the term life annuity means a series of substan- tially equal periodic payments, payable not less frequently than annually, for the life (or life expectancy) of the serv- ice provider, or a series of substan- tially equal periodic payments, payable not less frequently than annually, for the life (or life expectancy) of the serv- ice provider, followed upon the death or end of the life expectancy of the service provider by a series of substan- tially equal periodic payments, payable not less frequently than annually, for the life (or life expectancy) of the serv- ice provider’s designated beneficiary (if any). Notwithstanding the foregoing, a schedule of payments does not fail to be an annuity solely because such plan provides for an immediate payment of the actuarial present value of all re- maining annuity payments if the actu- arial present value of the remaining annuity payments falls below a pre- determined amount, and the imme- diate payment of such amount does not constitute an accelerated payment for purposes of § 1.409A–3(j), provided that such feature, including the predeter- mined amount, is established by no later than the time and form of pay- ment is otherwise required to be estab- lished, and provided further that any change in such feature, including the predetermined amount, is a change in the time and form of payment. A change in designated beneficiary before any annuity payment has been made under the plan is not a change in the time or form of payment. A change in the form of a payment before any an- nuity payment has been made under the plan, from one type of life annuity to another type of life annuity with the same scheduled date for the first annu- ity payment, is not considered a change in the time and form of a pay- ment, provided that the annuities are actuarially equivalent applying reason- able actuarial methods and assump- tions. For purposes of this paragraph (b)(2)(ii), a requirement that a service provider obtain the cons...
Life annuities. A life annuity is treated as a single payment. For purposes of this Section 4.02(B)(3), a “life annuity” is a series of substantially equal periodic payments, payable not less frequently than annually, for the life (or life expectancy) of the Participant, or the joint lives (or life expectancies) of the Participant and of his/her Beneficiary. A change of Beneficiary which occurs before the initial payment of a life annuity is not a change payment election. A change in the form of payment before any annuity payment has been made from one type of life annuity to another with the same scheduled date for the first payment is not subject to the change payment election requirements provided that the annuities are actuarially equivalent applying reasonable actuarial assumptions and that at any given time, the same actuarial assumptions and methods are used to value each annuity. The requirement of actuarial equivalence applies for the duration of the Participant’s participation in the Plan such that the annuity payment must be actuarially equivalent at all times for the annuity payment options to be treated as a single time and method of payment. The Plan over time may change actuarial assumptions and methods provided such methods and assumptions are reasonable. The following features are disregarded in determining if the payment is a life annuity but are taken into account in determining if one life annuity is the actuarial equivalent of another: (i) term certain features under which payments continue for the longer of the annuitant’s life or for a fixed period of time; (ii) pop-up features under which payments increase upon the death of the Beneficiary or other event which eliminates the survivor annuity; (iii) cash refund features under which there is a payment on the death of the last annuitant in an amount not greater than the excess of the present value of the annuity at the annuity starting state over the total payments before the last annuitant’s death; (iv) a feature under which the annuity provides higher periodic payments before the expected commencement of Social Security or Railroad Retirement Act benefits and lower payments after the expected commencement of such benefits, such the combined payments are approximately level before and after the expected commencement date; and (v) features providing for a cost-of-living increase in the annuity payment in accordance with Treas. Reg. §1.401(a)(9)-6, Q & A-14(A)(1) or (2). A joint and survivor annuity do...
