SEM Posted March 12, 2020 Share Posted March 12, 2020 I have a participant who is still employed and at NRA in a Profit Sharing Plan. She would like to take a distribution but the plan document does not allow for in-service distributions. I have looked in the Pension Answer Book and the 401(k) Answer Book to see if this is allowed because I am being told that the is an "unwritten rule" (LOL) that allows participants at NRA to take their money out of the plan. Can someone point me to the answer? Thank you. Link to comment Share on other sites More sharing options...
david rigby Posted March 12, 2020 Share Posted March 12, 2020 It supposed to be written. In the plan document, that is. Amend? Luke Bailey 1 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...
CuseFan Posted March 12, 2020 Share Posted March 12, 2020 The only unwritten rule in retirement plan administration is that those who follow unwritten rules in administering plans end up in trouble with the IRS and/or DOL. imchipbrown, ERISAGirl and Luke Bailey 3 Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com Link to comment Share on other sites More sharing options...
Larry Starr Posted March 12, 2020 Share Posted March 12, 2020 2 hours ago, SEM said: I have a participant who is still employed and at NRA in a Profit Sharing Plan. She would like to take a distribution but the plan document does not allow for in-service distributions. I have looked in the Pension Answer Book and the 401(k) Answer Book to see if this is allowed because I am being told that the is an "unwritten rule" (LOL) that allows participants at NRA to take their money out of the plan. Can someone point me to the answer? Thank you. Being told by whom? Make a note of their name and then make sure you never give credence to anything they ever say again! It requires specific plan language, and the plan can be amended to add that provision (every one of our plans allows for distributions at NRA even if still employed). Luke Bailey 1 Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC President Qualified Plan Consultants, Inc. 46 Daggett Drive West Springfield, MA 01089 413-736-2066 larrystarr@qpc-inc.com Link to comment Share on other sites More sharing options...
Bird Posted March 13, 2020 Share Posted March 13, 2020 I agree with the others. I would add that it's unusual, at least in my experience, to not allow an in-service withdrawal at NRA. It's possible that it is in fact allowed but not where you are looking. Ed Snyder Link to comment Share on other sites More sharing options...
rocknrolls2 Posted March 13, 2020 Share Posted March 13, 2020 I agree with nearly all of the foregoing. However, at the end of the day, whether such withdrawals are permitted is a plan design decision, over which the employer has the final say. If the employer chooses to change its mind, it simply needs to amend the plan. Link to comment Share on other sites More sharing options...
jsample Posted April 14, 2020 Share Posted April 14, 2020 The original question was for an active employee, however is the plan permitted to make a distribution under NRA for a terminated employee? I have a plan that that uses age 59 1/2 as the Normal Retirement Age. When a participant terminates: Distributions for termination of employment - paid after a participant incurs two year break in service Distributions for death, disability, retirement - paid as soon as administratively feasible An employee, age 60, terminated employment. Does he have to wait for two breaks in service to receive his distribution or because he terminated after NRA he is eligible for a distribution immediately? The employer is calling it a termination, not a retirement. Thanks. Link to comment Share on other sites More sharing options...
Larry Starr Posted April 14, 2020 Share Posted April 14, 2020 3 hours ago, jsample said: The original question was for an active employee, however is the plan permitted to make a distribution under NRA for a terminated employee? I have a plan that that uses age 59 1/2 as the Normal Retirement Age. When a participant terminates: Distributions for termination of employment - paid after a participant incurs two year break in service Distributions for death, disability, retirement - paid as soon as administratively feasible An employee, age 60, terminated employment. Does he have to wait for two breaks in service to receive his distribution or because he terminated after NRA he is eligible for a distribution immediately? The employer is calling it a termination, not a retirement. Thanks. Doesn't matter what the employer calls it. He meets the plan requirements for retirement and is entitled to the benefits provided by the plan in such circumstance. I'm sure it doesn't have any language requiring him to wait for two breaks in service. If the employer balks, participant calls DOL and that will solve the problem quick! Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC President Qualified Plan Consultants, Inc. 46 Daggett Drive West Springfield, MA 01089 413-736-2066 larrystarr@qpc-inc.com Link to comment Share on other sites More sharing options...
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