Under the IRS’ new rule for defined-benefit plans, employers must have their plans certified by actuaries, an action that may mean that some companies will be unable to provide retiring workers with lump-sum distributions. Some employers may even be forced to freeze their plans as a result of the new rules.

Under the 2006 Pension Protection Act, employers with calendar-year defined-benefit plans must have actuaries certify the funded status of their plans. Any plan that is found to be less than 80 percent funded will have to reduce the amount of lump-sum distributions they can pay out. Those with plans that are less than 60 percent funded will have to freeze their plans.

HR executives at companies that fall below the funding threshold will need to figure out how they will communicate to employees that their lump-sum payments may be reduced or eliminated and that their plans are being frozen.

Those employees who are retiring in the next few months are already asking for a calculation on how much they will receive from their pension. HR benefit administrators will need to let them know if their benefit payments are going to be significantly different than what they have been expecting.

Companies have 30 days to alert employees about a change in their benefit payments, but should try to give more notice than that. If a company misses the automatic deadline, its plan will default to being considered less than 60 percent funded and it will be forced to freeze its plan, with no lump-sum distributions allowed.