Continuation of periodic payments after re-hire following a good-faith

[gle3186]

The Thrift Plan of a company allows 4 types of periodic payment distributions (sometimes called installment payments) of which 2 avoid the 10% pentaly for early receipt of before-tax (BT) money. A participant terminates from the company (good-faith) and begins to receive periodic payments which may include BT and after-tax (AT) money. Two years later, for example, he returns to the employment of the company (re-hire). In such situations, the Plan allows the choice of either continuing the payments and not contributing to the Plan for this period of employment or discontinuing the payments and contributing to the Plan via employee contributions. Is it consistent with legislation/regulation that he may continue the periodic payments (to include BT contributions) during this second period of employment?

The above Plan is later amended to allow rehired retirees to both continue receiving periodic payments and make BT and AT employee contributions to the Plan? Is this consistent with legislation/regulation?

Any general guidance on these matters is appreciated.