Automatic Rollover - can the Plan Document say that Accrued Benefits less than $5K "may" be paid out, does it have to be "will" be paid out?

[Guest steeletheone]

Can the Plan Document or Amendment say that Accrued Benefits less than $5K "may" be paid out, does it have to be "will" be paid out?????

Basically, can the document give the option of Mandatory Cash-outs, without making them a requirement???

[QDROphile]

The plan administrator cannot have discretion over distributions.

[david rigby]

To elaborate, the "may" is permissible as long as the discretion is in the hands of the participant, not the plan administrator. However, what is the point of such a plan provision?

[Bird]

Plans are not supposed to give that discretion, but I know the Accudraft volume submitters were approved with that provision. That is expected to disappear with the EGTRRA restatements.

Most of our plans are written that way, and we're just administering each one consistently one way or the other (generally not cashing out) and will make sure the EGTRRA restatement reflects that approach.