Money Purchase Plan Terminating.. Can they force out participant balan

[Guest TrustMe401k]

Facts: Money Purchase plan terminated 9/30/99. Participant has vested balance of 6500. Received distribution paperwork with a letter stating that they must respond by 12/15/99 or balances will be paid out and taxes/penalties will apply.

Am I missing something because this is a plan termination, or am i correct in thinking that they can't force out distributions over $5000. Participant called me panicked about the timing of the entire process (today being 12/14 and all)

Please help!

[Wessex]

You cannot force a single sum distribution in excess of $5000 from a terminating money purchase plan because the qualified joint and surivivor annuity rules apply. If the participant does not respond, the plan must purchase an annuity contract for the participant -- a true J&S in the survivor percentage stated in the plan if the participant is married, a single life annuity if the participant is not married. In the particular situation you describe, it appears that the participant does want to make some election, so maybe there is still time for processing a distribution request for a direct rollover.

[This message has been edited by Wessex (edited 12-14-1999).]