ERISA Benefits Law Desk ReferenceERISA Benefits Tech, LLC

Part 7 · Chapter 4

Pension Risk Transfer

Law stated as of October 3, 2026 · Defined Benefit and Hybrid Plans

Scope and status

This chapter covers pension risk transfer (PRT) from ongoing single-employer DB plans — transaction structures, the settlor/fiduciary line, the DOL Interpretive Bulletin 95-1 "safest available annuity" standard, the SECURE 2.0 §321 review, the 2024–2026 PRT litigation wave, and the transaction and participant-protection issues. This is a heavy currency area: the Konya v. Lockheed Martin Fourth Circuit appeal was argued Sept. 16, 2026 and is pending as of Oct. 3, 2026, and the litigation and regulatory posture must be re-verified before relying on them.

Citations are to primary authority (ERISA §§404, 502; 29 C.F.R. §2509.95-1; the DOL's SECURE 2.0 §321 report; and case law). Related questions are treated elsewhere: the underlying fiduciary-duty framework in Part 3 (Fiduciary Duties and Prohibited Transactions); standard-termination annuitizations (Form 500 series, §4044, reversion/§4980) in Part 2 (Plan Documents, Amendments, Mergers, and Terminations); the §417(e) lump-sum-window math in this Part's hybrid/lump-sum chapter; and premium/headcount effects in this Part's PBGC chapter.

Sections

The opening sections of Part A are shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — Structures and Market Context

A1.The transaction forms

Part 7, ch. 4, § A1

  • Buy-out (full or partial "lift-out"): the plan purchases a group annuity contract irrevocably transferring benefit obligations for a covered population (commonly the retiree-in-pay cohort) to an insurer; the participants cease to be plan participants and become holders of annuity certificates. A full buy-out is the final step of a standard termination (route out); a lift-out removes a slice from an ongoing plan — this chapter's focus.
  • Buy-in: the plan purchases a group annuity that remains a plan asset, with the insurer reimbursing the plan for covered benefit payments; participants remain in the plan (PBGC guarantee and ERISA protections intact). Often a hedging step convertible to a buy-out.
  • Lump-sum windows: a temporary election window (deferred vesteds, or retirees — see A2) paying §417(e) lump sums; frequently paired with an annuity lift-out for the remainder. Practitioner consensus as to structures; ERISA §§3(7), 4022 as to the participant-status and guarantee consequences.

A2.Retiree lump-sum windows

Part 7, ch. 4, § A2

The IRS in 2015 announced it would treat lump-sum windows offered to retirees in pay status as violating the §401(a)(9) regulations, but Notice 2019-18 retracted that position — the IRS no longer intends to amend the regulations and will not assert a violation for retiree lump-sum windows, while it "continues to study" the issue. IRS Notice: Notice 2019-18 (superseding the position in Notice 2015-49).

  1. A3Why sponsors transactSubscribers

Part B — The Legal Framework

  1. B1Settlor vs. fiduciarySubscribers
  2. B2IB 95-1 — the safest available annuity standardSubscribers
  3. B3The SECURE 2.0 §321 review — DOL's 2024 reportSubscribers
  4. B4The litigation wave and Konya — status as of Oct. 3, 2026Subscribers

Part C — Running a Compliant PRT Process

  1. C1Governance and the independent fiduciarySubscribers
  2. C2Diligence and contract termsSubscribers
  3. C3Participant consequences and communicationsSubscribers
  4. C4Plan-side consequencesSubscribers

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.

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