Guest amm19 Posted March 22, 2002 Posted March 22, 2002 We are the TPA and document provider to a 401(k) Profit Sharing Plan. The Plan has a separated former HCE with several hundred thousand dollars in assets. The CPA for this plan insists that the plan can be re-written so that the separated participant is forced to rollover or cash out his account within 3 monhts, 6 months, or possibly a year after separation. I am unaware of such rules other than the TRA97 involuntary cashout for separated participants with balances under $5,000. Does he have any ground to support his thoughts about rewriting the plan to either exclude this former participant or force him to move his money?
Guest smhjr Posted March 22, 2002 Posted March 22, 2002 As far as I know you can only encourage them to roll the money over, but you cant force them to do so if they have over the $5000. Just mention Enron and why take that chance
mbozek Posted March 23, 2002 Posted March 23, 2002 Ask the CPA for citation. The hce can be kicked out if he/she has reached a date that is generally three years before the normal retirement age under the plan. mjb
dmwe Posted August 2, 2002 Posted August 2, 2002 This is a crazy twist. I have an employer who would like to put a lower dollar threshold for force outs in their document. Does anyone know of a reason why they couldn't?:confused:
david rigby Posted August 2, 2002 Posted August 2, 2002 If you mean, for example, that the employer wants to specify in the plan that all accounts less than $2000 will be distributed upon severance, and those over $2000 will be distributed at employee discretion, then that is permissible. The law permits this limit to be set in the plan, but no more than $5000. However, if the plan currently has a provision with a higher limit, then watch out for "cutback" issues. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
dmwe Posted August 2, 2002 Posted August 2, 2002 Do you know where I can find that in the regs? Thanks
david rigby Posted August 2, 2002 Posted August 2, 2002 Try IRC 411(a)(11). I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
Guest Gordy Posted August 2, 2002 Posted August 2, 2002 To mbozek: What's your site on forcing HCE distributions based on nearness to NRA? Thanks
mbozek Posted August 3, 2002 Posted August 3, 2002 1.411(a)-11©(4)- consent is required for distributions prior to the later of the NRA or age 62. sorry mjb
Guest asire2002 Posted August 5, 2002 Posted August 5, 2002 I believe the cutback regulations allow cutbacks that only affect those with account balances below the thresshold, e.g., if you never had a forced cashout provision, I believe you can implement one without violating the cutback rules.
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