LSU2020

Dare, thanks ... very helpful to hear what others are doing. As you noted the concern is a sham termination by a participant who is not eliglble for an in-service distribution. I know many employers have the rule and then exceptions can be made when the facts are clear there was a termination - for example, a RIF where severance was paid. Again, thanks.

Lou S. thanks. Agree it is ultimately a facts and circumstances, but I do have a number of clients that have policies that start with a general rule no re-hire during X period (unless age 59 1/2 and the plan premittes in-service withdrawals so it is not (arguably) an issue if the termination is extremely short).

I trying to get a sense of how long employers are prohibiting the re-hire of employees who have a 401k account and are under age 59 1/2 to support there is a true termination of employment versus a sham termination. I have seen time periods that range from 3 months to 6 months and less often 12 months. For this purpose, assume there is no pre-termination agreement between the employer and employee to re-hire. Thanks!

Seller 401(k) plan is terminated mid-year. The 415 regs provide that in such case the limits are reduced pro-rata based on the plan termination date. As a result of the reduction, 415 was exceeded for some participants who terminated employment and took their balances (with the excess amount). EPCRS Section 6.06(4) indicates that if a former employees does not return an overpayment, then the employer or “other person” must put the funds in the plan's forfeiture for use for future contributions. But here the plan is terminated and so there will not be any future contributions and all funds int he forfeiture account will be used to pay expenses. Is there an argument that in this case there is no need for the employer to put the funds into plan because this plan is not harmed if the funds are not returned as the other participants will not get the funds? Thoughts.