As previously announced, the IRS has provided official guidance on how to implement the new interest rate and mortality table prescribed by the Pension Protection Act (PPA) for calculating lump sum payouts from a pension plan.  After careful legal review of the guidance and the various options available, Northrop Grumman will implement the new interest rate and mortality table for retirements effective on or after 1/1/2010. 

The PPA legislation provided for a five year phase-in for the interest rate calculation.  It was our original intent to utilize the full five years beginning in 2009.  However, the guidance makes it clear that the phase in must be completed by the end of 2011.  The following chart compares the standard phase-in schedule to the one that Northrop Grumman will utilize:

By utilizing this method plan participants will continue to have the full benefit of the old interest rate for another year which will provide ample time for planning and understanding the impact of the new rules.

Northrop Grumman Benefits Services Representatives will be conducting periodic Lump Sum education seminars throughout the year. These seminars will discuss the advantages and disadvantages of the lump sum option, review how the lump sum is calculated and describe the impact of the new tables. The seminar schedule will be posted to Benefits OnLine.