Involuntary Cash-Outs

[Guest Chaffee]

Participant had vested balance > $5,000 at termination. At Age 70.5, minimum required distributions started. Balance at 12/31/03 was approximately $4,900 (after two years of MRDs). In case where balance at termination exceeded $5,000, plan document states that if the balance "subsequently falls below the cash-out amount for any reason prior to the commencement of installment or annuity payments", that amount may be paid in a single sum.

In this case, may the Plan Administrator pay out the $4,900 in early 2004 or is there a prohibition against this once the Age 70.5 distributions begin? Or is there a presumption that minimum required distributions will continue until they reach $5,000 and are then paid out?

On a separate question, is the exclusion of rollovers for determining the cash-out limit (per EGTRRA) an election or by default? If no election is made, is the Administrator required to include the rollovers?

[Brian Gallagher]

No answer on the first question, but the default will be stated in the plan document--it all depends on how it is written.

(well, it <u>should,</u> be stated)