Leaderboard

Probably - I think someone is either (actively) employed or terminated. If terminated, then obviously there is no need for in-service distribution. If not terminated - so no distributable event - then I think you're considered employed and eligible for in-service distribution assuming all other requirements for such are satisfied.

Like Bird said, this is likely to confuse participants. If you are the TPA, there are also a few other items I'd consider: What problem is this intended to solve? Do the plan document and trust agreement permit it? If it's not a pooled account, is the recordkeeper on board?

It doesn't matter until it matters. If you are 100% certain that the vesting and distribution options are identical and that there is in fact no reason to keep them separate, then go for it. But then there is the question of what to call it. Any one of the three former sources would be wrong, and might create confusion. It also might depend on who "we" represents. If you're not the TPA, then that's who you need to consult with. If you are the TPA, consider whether it isn't easier to just leave it alone.