Distribution Timing

[Guest padmin]

Plan document stiplulates that termination distribution is paid as soon as administratively feasible following plan year end. Pooled annual valuation profit sharing plan. Plan year end was 08/31/03 and participant termed 06/03 and is entitled to ps cont. Can we wait until ps is funded to pay out participant? If the employer waits 81/2 months to fund is this as soon as feasible?

[Jed Macy]

When you ask: "Can we wait . . . ?" That is a legal question, and a good question. Probably the best answer is yes if to pay it sooner than funded means that you are paying him with other participants benefits.

As a practical matter, I usually pay it without waiting because the amount of the accrued contribution for the terminated participant(s) is a low percent of total plan assets. However, if it represents a large percent of assets (because it is a young plan), then you might not have enough funds to do so.

The other issue you raised is whether it is "as soon as administratively feasible" to wait. The standard of "as soon as administratively feasible" applies to the plan's Adminstrative Committee and not the plan sponsor. And it is the plan sponsor's right under the plan document to delay funding until the extended due date of its tax return.

[david rigby]

Probably want to be consistent. Look to prior practice for precedent?