I think I'm ok with this but just want to make sure.
1 man plan is only 70% funded. He's past NRA and wants to take in-service distribution (assume final regs on in-service distributions are met). I believe the 1.401(a)(4)-5 restrictions on pre-termation distributions (110% funded rule) would not be required here as with no NHCE or even other HCE to be concerned about he can essentially waive that rule, correct ? If so, then he'd be left with only the AFTAP restriction in which case he could only distribution 50% of his lump sum (up to the PBGC max benefit).
Any disagreement ?
Full Version: 1 man plan post-NRA distributions
QUOTE (JAY21 @ Nov 16 2009, 06:19 PM) 
I think I'm ok with this but just want to make sure.
1 man plan is only 70% funded. He's past NRA and wants to take in-service distribution (assume final regs on in-service distributions are met). I believe the 1.401(a)(4)-5 restrictions on pre-termation distributions (110% funded rule) would not be required here as with no NHCE or even other HCE to be concerned about he can essentially waive that rule, correct ? If so, then he'd be left with only the AFTAP restriction in which case he could only distribution 50% of his lump sum (up to the PBGC max benefit).
Any disagreement ?
1 man plan is only 70% funded. He's past NRA and wants to take in-service distribution (assume final regs on in-service distributions are met). I believe the 1.401(a)(4)-5 restrictions on pre-termation distributions (110% funded rule) would not be required here as with no NHCE or even other HCE to be concerned about he can essentially waive that rule, correct ? If so, then he'd be left with only the AFTAP restriction in which case he could only distribution 50% of his lump sum (up to the PBGC max benefit).
Any disagreement ?
Take a look at the Plan document language. While your conclusion makes perfect sense, it's possible the plan does not give you the out and you just can't ignore them because there is de facto no discrimination. I.e., the pre-termination restrictions still apply and the Plan can only distribute the life only actuarial equivalent. If all else fails, get a legal opinion.
QUOTE (JAY21 @ Nov 16 2009, 05:19 PM)
I think I'm ok with this but just want to make sure.
1 man plan is only 70% funded. He's past NRA and wants to take in-service distribution (assume final regs on in-service distributions are met). I believe the 1.401(a)(4)-5 restrictions on pre-termation distributions (110% funded rule) would not be required here as with no NHCE or even other HCE to be concerned about he can essentially waive that rule, correct ? If so, then he'd be left with only the AFTAP restriction in which case he could only distribution 50% of his lump sum (up to the PBGC max benefit).
Any disagreement ?
1 man plan is only 70% funded. He's past NRA and wants to take in-service distribution (assume final regs on in-service distributions are met). I believe the 1.401(a)(4)-5 restrictions on pre-termation distributions (110% funded rule) would not be required here as with no NHCE or even other HCE to be concerned about he can essentially waive that rule, correct ? If so, then he'd be left with only the AFTAP restriction in which case he could only distribution 50% of his lump sum (up to the PBGC max benefit).
Any disagreement ?
Frankly, if he takes all of the plan assets and rolls over the amount he does not have to receive as taxable income, then what?
Oh, yes, the remaining assets are more than sufficient for all of the other participants. Hmmm. I guess that's OK.
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