Distribution okay upon layoff?

[John A]

Can defined contribuiton plan documents provide that a layoff is a distributable event? Or does a layoff have to be considered a termination of employment for a laid off participant to receive a distribution?

Excerpt from 1.401-1 (B)(1)(ii):

(ii) A profit-sharing plan is a plan established and maintained by an employer to provide for the participation in his profits by his employees or their beneficiaries. The plan must provide a definite predetermined formula for allocating the contributions made to the plan among the participants and for distributing the funds accumulated under the plan after a fixed number of years, the attainment of a stated age, or upon the prior occurrence of some event such as layoff, illness, disability, retirement, death, or severance of employment.

[mbozek]

PS plans are different- they can provide for distributions without a termination of employment because they are not established for the purpose of providing retirement benefits.