Notice Requirements for Elimination of 70-1/2 In-Service Distribtion.

[Guest PJW]

What, if any, are the notice requirements for amending a plan to eliminate age 70-1/2 in serive distributions?

I've reveiwed the various IRS notices and announcements as well as the IRS regs and the preamble, but found no special notice requirements. Should the plan follow the notice requirements as if it were eliminating an optional form of benefit?

[Appleby]

Distributions at 70 ½ are not deemed in-service distributions. By definition, an in-service withdrawal is one that may be taken when there is no triggering event, i.e. death, disability, termination of employment, termination of plan or attainment of retirement age. Since the maximum retirement age under a plan is 65, the participant would already have a triggering event (attainment of retirement age) at age 70 ½.

I doubt a plan can be amended to prevent a 70 year old participant from taking a distribution.

[Fred Payne]

I agree with Aplleby, but was PJW really asking a different question? You can eliminate a Participant's (other than a more than 5% owner) right to receive in-service distributions on April 1 of the calendar year following the year in which the participant attains age 70 1/2. What are the notice requirements for this?

[KJohnson]

This was specifically allowed in revisions to the 411(d)(6) regulations. See 1.411(d)(4) Q&A 10(B).

Any such amendment is effective as of the later of December 31, 1998 or the date the amendment is actually adopted. The amendment also must be adopted prior to the end of the GUST remedial amendment period.

Thus, if your Plan has not been updated for GUST, it is probable that the "in-service" distribution is still in place. If however, your Plan has been updated, you should check the language to see if the in-service distirbuiton option prior to actual retirement/separation from service has been eliminated.

[Fred Payne]

Thank you. But do you have to give PRIOR notice about the elimination of the election as part of the GUST restatement process?

If you were eliminating the QJSA and QPSA benefits for PS balances, a a 90-day notice is required, I beleive.

[Guest PJW]

Yes, I agree with everything that has been said about eliminating the 70-1/2 in service distributions. However, the original issue I presented questioned whether there were notice requirements for amending the plan to eliminate these distributions.

The regs regarding the the elimination of the 70-1/2 in service distribution referred to this distribution option as an "optional form of benefit." 1.411(d)(4)Q&A10(B). This led me to believe that doing so would subject the plan to the notice requirements imposed on eliminating optional forms of benefits as described in 1.411(d)(4)Q&A2(e). However, on closer examination I don't believe that is the case at all.

[Guest PJW]

You beat me to it, Fred.

[KJohnson]

I agree that no notice is required other than an SMM. No 204(h) implications for money purchase or db plans because this is really an elimination of an optional form of benefit rather than a reduction in accrued benefits.