Miller & Chevalier Obtains IRS Private Letter Ruling on Retiree Lump Sum Offer


Washington, D.C., July 13, 2012  – The Internal Revenue Service (IRS) today released Private Letter Ruling (PLR 201228045), a ground-breaking ruling in which the IRS allows a company to offer retirees lump sum “buyouts” under its defined benefit pension plans. Miller & Chevalier represented the company before the IRS in securing this ruling.

The company sought clarification of the application of the regulations under Internal Revenue Code section 401(a)(9) to offering lump sums to retirees in pay status under a plan amendment, and engaged Miller & Chevalier to seek an advance ruling from the IRS on the proposed offer.

The IRS ultimately ruled that based on the underlying facts and circumstances, the lump sum offer satisfied the “plan amendment” exception under Treasury Regulation section 1.401(a)(9)-6, Q&A-14(a)(4).

The ruling and the related strategy of offering retirees a lump sum in lieu of continued annuity payments is a significant development, particularly as companies continue to pursue various strategies to de-risk their pension plans.

Fred Oliphant and Elizabeth Drake of Miller & Chevalier represented the client before the IRS.

About Miller & Chevalier

Founded in 1920, Miller & Chevalier is a Washington, D.C. law firm with a global perspective and leading practices in tax; employee benefits, including ERISA; international law and business; complex litigation; and government affairs. For more information on the firm, visit

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