involuntary consent to distribution

[Guest pjalazo]

Once upon a time, the IRS took the position that if the investment of a term vested participant's account balance was more restrictive than that availbale to an active participant, the consent given by the terminated participant to receive his distribution was invalid since the disparity in treatment (i.e., pooled funds vs fixed income money market) resulted in the participant being coerced to take a distribution.

I cannot remember the citation ofr this position. ANy help?

[KJohnson]

It was probably the significant deteriment rule from the 411(a)-11 regs:

(2) Consent. (i) No consent is valid unless the participant has

received a general description of the material features of the optional

forms of benefit available under the plan. In addition, so long as a

benefit is immediately distributable, a participant must be informed of

the right, if any, to defer receipt of the distribution. Furthermore,

consent is not valid if a significant detriment is imposed under the

plan on any participant who does not consent to a distribution. Whether

or not a significant detriment is imposed shall be determined by the

Commissioner by examining the particular facts and circumstances.

[mbozek]

See RR 96-47.