Jump to content

Pre 87 after tax contributions


Guest Retirement4Life

Recommended Posts

Guest Retirement4Life

Is there a reg that states that pre 87 contributions must be taken out first? Participant has a large balance of which a small portion around 10k is pre 87 after tax. Participant wants to distribute only part of his total balance (which is allowed under plan terms) and that the partial distribution be only pre-tax money. Record keeper is stating that they can't process the request because the rules state that pre87 money has to come out first and that since the participant has pre87 that he must distribute that amount even if he wants only pre tax money. What rule is this? The plan document is silent on this issue and this is the first time such a request has ever come through. Other participants with pre87 money elect to just take a total distribution.

Link to comment
Share on other sites

Is there a reg that states that pre 87 contributions must be taken out first? Participant has a large balance of which a small portion around 10k is pre 87 after tax. Participant wants to distribute only part of his total balance (which is allowed under plan terms) and that the partial distribution be only pre-tax money. Record keeper is stating that they can't process the request because the rules state that pre87 money has to come out first and that since the participant has pre87 that he must distribute that amount even if he wants only pre tax money. What rule is this? The plan document is silent on this issue and this is the first time such a request has ever come through. Other participants with pre87 money elect to just take a total distribution.

See Pub 575 page 15 for Non-Periodic distributions from a Qualified Plan

Here: PUB 575

JEVD

Making the complex understandable.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...