BG5150 Posted August 27, 2020 Share Posted August 27, 2020 Plan doc excludes rollovers when determining the cashout balance. Participant has $550 PS (100% vested) and $45,000 Rollover. Because R/O is excluded, this participant is a candidate to be cashed out. Does the trustee just cash out the entire account and withhold $9,100? Or do they roll over the balance to an IRA? (The plan's threshold for IRA rollovers is $1,000) 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...
C. B. Zeller Posted August 27, 2020 Share Posted August 27, 2020 Roll it over to an IRA. From Notice 2005-05: Quote Q-14. Are amounts attributable to rollover contributions that exceed $5,000 subject to the automatic rollover provisions of § 401(a)(31)(B)? A-14. Yes. Section 401(a)(31)(B) applies to the entire amount of a mandatory distribution. Thus, for example, the portion of the distribution attributable to a rollover contribution is subject to the automatic rollover requirements of §401(a)(31)(B), even if that amount is excludable (under § 411(a)(11)(D)) from the determination of whether the present value of the nonforfeitable accrued benefit exceeds $5,000. ugueth, Luke Bailey and Degrand 3 Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co Link to comment Share on other sites More sharing options...
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