Reference no: EM132895492

Questions

1. Mary Jones is about to retire. She has participated in a DBP and is considering whether to take a lump sum distribution instead of the annuity payments. Her company is telling her that they are using a 14 percent discount rate and mortality tables developed in 1972. What impact would these assumptions have on her lump sum? Would the PPA be helpful to her in this situation? Explain. What if Mary were suffering from incurable cancer and the employer knew about it? How would that affect her request for a lump sum instead of an annuity? Can the employer legally take this information into consideration? What if the employer included a COLA adjustment in his retirement annuity? Should that be included in the lump sum? In the case when a participant chooses a lump sum, must the spouse waive the joint survivor benefit? 

2. You are the plan administrator of a DBP and the investment committee for the plan has generally followed a conservative investment strategy. This has resulted in a slight underfunding of the plan and your CEO has requested that you urge the committee to adopt a more aggressive investment strategy that will, at least for a while, mitigate the funding shortfall. What are the legal issues here and what action should you take with respect to the CEO's request? See California Ironworkers Field Pension Trust v. Loomis Sayles & Co., 259 F.3d 1036 (9th Cir. 2001). See also U.S. Department of Labor Advisory Opinion, 2006-08A. What if the suggestion made in 2007 was to invest in subprime mortgages?