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There is no discrimination without an HCE to discriminate in favor of. So, there are no issues. Just ensure the plan's formula allows the flexibility to allocate the contribution at a different level. Good Luck!

"this letter says correct or else." New way to interpret the "V" in VFCP. Maybe is should be rebranded the Mandatory Fiduciary Compliance Program.

I doubt a group annuity can truly be involved in an "in-kind" distribution. They might have a "deal" for existing participants to roll out to an individual annuity without a sales charge, with the same funds, but it's not truly in-kind. (Even with direct-held mutual funds, moving the "same" funds from a retirement plan to an IRA is likely not in-kind since it is likely changing share classes from R to A, or whatever.)

Probably with the insurance company/agent. If it is a group annuity, they might issue the participant a "certificate" or something. Individual annuity policies can be assigned to the individual. If the participant wants it, possible the company will issue an individual annuity policy as an IRA rollover/transfer instead of distributing cash. A lot has probably changed since I flushed all this insurance stuff from my memory banks.

Amend the plan to allow in service after age 70 1/2: problem solved!

I also agree with your approach pmacduff, and think mctoe's point is a good one, but would rephrase it. It is not only an issue of whether they will report it correctly, but whether they're recordkeeping will allocate the distributed amount, based on the employee's election, all to the Roth portion of the balance. Some recordkeepers do that. Others may not have a place on the distribution forms or on website to indicate which portion of the account the participant wants the distribution from, and may use a pro rata or similar rule.