Separation of Service & Rehire

[Guest benefitsanalyst]

An employee left the company and thus had a distributable event. The EE left their money in the plan as it was greater than 5k and was rehired 6 months later. Can this EE still take a distribution of their account or must they wait until they leave the company, again?

[david rigby]

Most likely a distribution should not be made. However, the plan provisions are more important than my opinion.

You don't say whether the EE actually requested a distribution. If not, then rehired, it is very unlikely the plan would permit such a distribution now.

[QDROphile]

Your plan document sucks if it does not address this issue.

[Guest benefitsanalyst]

I guess our Plan Document sucks then because it does not address this issue. What do most plans do? I would gather not allow a distribution.

[Blinky the 3-eyed Fish]

If the only distributable event available here is termination of employment, then I don't see how a distribution could be made to an employee that is not terminated. I would go as far to say that even if he/she had completed the election forms, but was rehired before the check was issued, that the distribution should be stopped.

BTW, I don't recall seeing "suck" ever posted before on these boards. I should do a search.

[FundeK]

Your plan document sucks if it does not address this issue.

I love your approach; direct, to the point, and no fluffing it up!

Most of the plans I have seen did not specifically address this issue. I have never seen a plan allow the participant to take a distribution because there was no distributable event.

Do most prototype of volume submitters address this, or would it normally be seen in an individually designed?

[Blinky the 3-eyed Fish]

I stand corrected, there are 2 prior instances of the use of the word "suck" in the same context on these boards. One is too from QDROphile that I chose to copy:

"However, if the plan even has written procedures, they probably suck."

[Guest benefitsanalyst]

Thank you!

[TBob]

Prior Thread

[Guest benefitsanalyst]

Thanks TBob!

[david rigby]

Blinky, to be precise, the word is "sucks". Several prior uses, which we leave to the user for searching.

[Blinky the 3-eyed Fish]

To continue this important line, pax, you are correct. In fact, I even used in once in jest. I guess it sucks when you look up suck instead of sucks.

Trivia - who said this?

"Yeah Moe that team sure did suck last night. They just plain sucked! I've seen teams suck before, but they were the suckiest bunch of sucks that ever sucked!"

[WDIK]

Homer Simpson.

Edit: By the way, what was the topic of this thread?

[QDROphile]

Now I know how to get attention. Back to the point. I favor plan provisions that prevent a distribution after rehire until subsequent termination.

Blinky suggested a way to that result via interpretation of plan terms that are inadequate, or otherwise suck.

Special attention is required if the participant has started distributions before rehire in the form of installments.

[Brian Gallagher]

i looked thru my prototype and i don't see the issue of rehires/distributions raised.

does our doc "suck"? it was written by corbel--i thought they were generally pretty good.

btw: isotopes rule!

[JanetM]

I don't think any plans directly address rehires. You would have to look at what triggers distribution. Usually they are termination, disability, retirement and death. I interpret the language to mean if any of these conditions do not exist at time of distribution there can be none.

[QDROphile]

Well, JanetM, my plan documents directly address distributions after rehire, both defined benefit plans and defined contribution plans.

[JanetM]

What type of doc do you have? Our plans were drafted by local law firm.

[QDROphile]

I write them. I am sure that your law firm would like to consider suggestions for improvement of plan documents. I like constructive observations and my documents benefit from them over time. Start with "Your documents suck" to put them into a receptive frame of mind.

[RTK]

If push comes to shove, in the absence of specific plan provisions, I would agree with JanetM. My dc documents cover this, but only those done after a smart client asked me the question. (You gotta love it when the client has better issue recognition.) My db documents cover this in connection with reemployment/suspension of benefits.

[JanetM]

We address rehires for vesting and eligibity in docs. But not specifically the issue of distribution being allowed or not allowed after rehire.

LOL I don't think saying "your doc's suck" will put them in receptive frame of mind. Knowing them they will double hourly rates for the meeting. What the hell, maybe I will tell them the doc's are candidates for the short bus.