Posted 23 September 2002 - 06:57 PM
If because of the lousy market we've all been enjoying a terminated participant's vested balance drops below $5,000, can the Sponsor affect an involuntary distribution from a DC plan? Let's assume for the discussion there is no rollover balance in the participant's account.
My memory has it that if the balance was ever over $5K, the involuntary distribution was not possible. But something tells me that was changed (although I can't find a source.) Everything I read now refers to the "present" balance being under $5K.
I suspect that the answer to my question is Yes.
Posted 24 September 2002 - 03:50 AM
Posted 24 September 2002 - 12:08 PM
Posted 24 September 2002 - 04:15 PM
The cash out rules in 1.411(a)-7(d)(4) permit "service" to be disregarded. Notably, under the final 2000 IRS regulations amendments, a distribution is deemed to be made due to the termination of participation in the plan for purposes of the involuntary cash out rules if made no later than the end of the 2nd plan year following plan year termination of participation occurred, or if the distribution would have been made by the end of that 2nd plan year but for the fact that the accrued benefit exceeded then cash out limit.