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Even textualists say an interpreter might find meaning in how a word is used in related contexts. There are many statutes and rules in the tax law of retirement plans that use the word “employee” despite a context that suggests the use includes a participant who is a former employee. To pick only one example (and we could find many), the proposed rule to interpret and implement Internal Revenue Code § 401(a)(9) has 1,349 uses of the word “employee” (and only 41 uses of the word “participant”). Proposed § 1.401(a)(9)–2(a) states: “Distributions commencing during an employee’s lifetime In order to satisfy section 401(a)(9)(A), the entire interest of each employee must be distributed to the employee not later than the required beginning date, or must be distributed, beginning not later than the required beginning date, over the life of the employee or the joint lives of the employee and a designated beneficiary or over a period not extending beyond the life expectancy of the employee or the joint life and last survivor expectancy of the employee and the designated beneficiary.” https://www.govinfo.gov/content/pkg/FR-2022-02-24/pdf/2022-02522.pdf Does the Internal Revenue Service, acting under the Secretary of the Treasury’s delegation, intend to limit that minimum-distribution rule to a participant who is still an employee? Likewise, the statute the proposed rule would interpret and implement reads: “Required distributions.— (A) In general.— A trust shall not constitute a qualified trust under this subsection unless the plan provides that the entire interest of each employee— (i) will be distributed to such employee not later than the required beginning date, or (ii) will be distributed, beginning not later than the required beginning date, in accordance with regulations, over the life of such employee or over the lives of such employee and a designated beneficiary (or over a period not extending beyond the life expectancy of such employee or the life expectancy of such employee and a designated beneficiary). I.R.C. (26 U.S.C.) § 401(a)(9)(A) http://uscode.house.gov/view.xhtml?req=(title:26%20section:401%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section401)&f=treesort&edition=prelim&num=0&jumpTo=true Does Congress intend to limit that minimum-distribution rule to a participant who is still an employee? Does Congress intend to impose a too-early tax on a participant who submitted her claim within § 414(w)’s time but not until after her severance from employment?

If the employee is really that important to the employer, give them a bonus, forget about the plan, and get everyone back to work?

BG5150, the issue seems not to be addressed in either the 414(w) regulations or the preamble to the regulations. I think you could interpret both the statute and the regulations either way, in effect interpreting "employee" as including someone who was, obviously, an employee when the auto contributions were made. Neither the statute nor the regulations appear to preclude that interpretation. Belgarath's take certainly is closer to the literal language of both the statute and the regs. On the other hand, treating this as a permissible withdrawal under 414(w) would seem more in keeping with the purpose of the statute to protect new employees from the consequences of having unelected elective contributions made. I take it there is no vested match here that would, in effect, counterbalance the effect of the 10% premature distribution tax?