In recent years, pension plan sponsors have struggled to find opportunities to manage their growing pension liabilities, since passage of the 2015 policy by the IRS shut the door on sponsors looking to offer pension plan retirees a lump-sum settlement option With that policy being retracted, sponsors of pension plans are once again given the opportunity to evaluate whether a retiree lump-sum window is a viable option for them, as a tool to help manage their pension liability.

Often, the reason behind these sponsors who choose to back pension plans is that it allows them to use lump-sum windows as a way to protect their plans; reducing the possible impact of market volatility, mortality table changes, changes in funding rules, as well as a number of other pension and market uncertainties. Prior to the 2015 policy, some plan sponsors would often offer defined benefit plan participants who were not yet collecting a 'window,' or short period of time's worth, of lump-sum payments from their benefit. In some cases, the sponsors would also offer a “retiree lump-sum window” to retirees already receiving lifetime annuity payments at the time; in this case they could convert their remaining annuity payments into an immediate lump-sum.

Before finalizing any estate plan, it is worth examining how Phillips 66's employer-sponsored benefits fit into the broader picture. According to publicly available information, Phillips 66 maintains a cash balance pension plan, which defines your retirement benefit as a hypothetical account balance that grows over your career through pay credits and interest credits. Under ERISA, cash balance plan benefits vest on a three-year cliff schedule. Phillips 66 also offers retiree healthcare benefits to eligible employees. Because the specifics of your cash balance account balance, vesting status, and benefit options depend on your individual employment history and plan documents, We encourage you to review your Summary Plan Description (SPD) or speak with Phillips 66's HR or benefits team for the most current details.

The Treasury Department and the IRS will continue to keep a close eye on retiree lump-sum windows, beginning a process that will allow for the development of further regulation in the future. However, for now, it seems that plan sponsors are once again able to consider the suitability of a retiree lump-sum window without fear of retaliatory action from the IRS. However, it is important to note that, just because a plan sponsor can now offer a retiree lump-sum window, this does not mean that any one with the potential to will choose to offer this feature. The decision to offer desirable alternative retirement plans is a choice that will be up to the discretion of each individual sponsor based on the investment opportunities indicated by your specific situation.