Lynn Campbell Posted February 28, 2004 Posted February 28, 2004 If a participant is due only $15 as her vested interest, is this distribution subject to the same consent rules as a $3,000 distribution? I realize it is exempt from withholding, but it seems bizarre to have all that paperwork for such a tiny amount. Is there any exception here? What is the normal TPA practice in this case? Thanks for all input!
Everett Moreland Posted February 28, 2004 Posted February 28, 2004 I know of no consent requirement imposed by law for a distribution less than $200 where that is the only distribution to the participant during the plan year.
david rigby Posted February 28, 2004 Posted February 28, 2004 Assuming you are referring to the mandatory 20% withholding on lump sum amounts distributed other than a direct rollover, there is no withholding (at least for federal purposes) below $200. That is, the $15 balance is subject to the same rules, but the amount of withholding is $0. However, such participant should still receive the "special tax notice". 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.
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