Jump to content
austin3515

Furloughs and layoffs

Recommended Posts

So an employer furloughs half its work force for 30 days. They are scheduled to come back in 30 days. 

They are still active correct?  And cannot take a distribution?

Similarly, they would be considered to be on a leave with respect to their loans?

Share this post


Link to post
Share on other sites

thank you Loius!  I actually found that one this morning.  What I am hoping for though is an article that discusses specifically whether a layoff or a furlough creates a distrbiutable event.  My recollection from past research is that it can be very gray, especall for layoffs. Presumably the restaurateur that laid off the wait staff expects to hire them all back.  It's such a gray area.

Share this post


Link to post
Share on other sites

Agreed, Austin.  I have been looking at the same issue for a number of clients, and my understanding is that regardless of the terminology used (i.e., furlough, layoff, leave of absence), it really depends on the facts and circumstances of the situation.  Under 1.401(k)-1(d)(2) a severance from employment requires that the participant ceases to be an employee of the employer.  So this really becomes more of a payroll issue.  In my view, if this is intended to be a temporary leave , it is probably not a severance from employment.  Of course, the employee could always quit (or the employer could terminate them) down the road and convert it to one.

Share this post


Link to post
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...