Mandatory Rollover Rules

[Guest hyper]

Client is reducing mandatory distributions to $1,000 or less without Participants consent. Client would also like to allow lump sum distributions of $1,000 to $5,000 with participant consent (to avoid mandatory rollover).

Question: In addition to the lump sum distribution, does a QJSA have to be offered to the partcipant with the $1,000 to $5,000 balance ?

I do not think so because the regs. under 417 and 411 only require consent for amounts over $5,000, but we have a conflicting opinion.

Thanks for any help.

[AndyH]

What is the argument for yes?

[Guest hyper]

The arguement I get is that the act of getting participant consent to avoid the rollover requirements of 401(a)(31)(B) for balances between 1,000 to 5,000 make the distribution subject to the QJSA and consent requirement 411 and 417.

I am not sure how the distribution is subject to 411 and 417 since the statute itself under 417 says a distribution can be made without consent if under the cashout limit.

[MGB]

The official IRS view is that spousal consent is not required (this was originally stated by Jim Holland at the CCA meeting last fall, and recently was in an IRS Notice). That implies to me that a QJ&S is not required because they trigger off of the same issues.

However, at some recent meeting, Paul Shultz was heard to have said that a QJ&S was required.

I'll leave this tidbit as is - unofficial.

[Blinky the 3-eyed Fish]

:angry: Schultz is leaving the IRS soon and is just making waves before he goes.

(Hey, there's a limit to the number of little dudes you can include in a message. I was going for the record.)

[AndyH]

Wasn't he leaving a couple of years ago? How much notice do they give there?

Oh, and just as a pre-emptive strike, "Who and what decide what is official?"

[Blinky the 3-eyed Fish]

They had it to the day at the LA Benefits Conference. I thought it was in March sometime, so he might be gone already.