Cynchbeast Posted May 18, 2017 Share Posted May 18, 2017 We have always operated with the understanding that plan may simply pay out terminated participants with less than $200, of course with nothing withheld. Does anyone have a reference we can cite authorizing the plan to do this? We have plan trying to clear out old dead wood and several people have balances well below the $200. Link to comment Share on other sites More sharing options...
ETA Consulting LLC Posted May 18, 2017 Share Posted May 18, 2017 Your best cite would be your plan document. At any rate, this provision is under the eligible rollover rules. What you're doing is providing them a distribution notice (which effectively explains their rollover rights). If the balance is less than $200, then there is no right to rollover; you don't even need to give them a notice. So, you can review the language of your notice, or the plan document, They should be pretty consistent. Good Luck! CPC, QPA, QKA, TGPC, ERPA Link to comment Share on other sites More sharing options...
BG5150 Posted May 18, 2017 Share Posted May 18, 2017 Here's something from the 1099-R instructions: You are not required to withhold 20% of an eligible rollover distribution that, when aggregated with other eligible rollover distributions made to one person during the year, is less than $200. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
Mike Preston Posted May 18, 2017 Share Posted May 18, 2017 Folks aren't going to like this, but....... there is no exception to the 402(f) Notice for distributions under $200. With that said, the 402(f) regulations allow a plan sponsor to remove inapplicable sections. So, other than plan identifying characteristics you end up with a very short 402(f) Notice that merely tells them they have the right to rollover what they have received if they want to do so, as long as they do it "timely" (I don't have time to look up the rule, but I think it is within 60 days). Then again, is the only downside to not providing a 402(f) Notice a potential $10 fine? Unless you want to drag in the "intentional violation of ERISA" stuff (but I find it hard to believe somebody would pull out such a heavy handed enforcement tool in this case). Link to comment Share on other sites More sharing options...
ETA Consulting LLC Posted May 19, 2017 Share Posted May 19, 2017 I agree. What I meant to suggest was that minimum 30 day notice doesn't apply. So, you can issue the notice with the distribution as opposed to waiting for them to respond. I misspoke. Good Luck. CPC, QPA, QKA, TGPC, ERPA Link to comment Share on other sites More sharing options...
gregmk Posted May 19, 2017 Share Posted May 19, 2017 Check out: I.R.C. 411(a)(11)(A) Treas. Reg. §1.401(a)(31)-1, Q&A 11 Treas. Reg. §31.3405(c)-1 Q&A 14 Link to comment Share on other sites More sharing options...
david rigby Posted May 19, 2017 Share Posted May 19, 2017 https://www.gpo.gov/fdsys/pkg/CFR-2016-title26-vol17/pdf/CFR-2016-title26-vol17-sec31-3405c-1.pdf I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice. Link to comment Share on other sites More sharing options...
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