Payouts

[Jilliandiz]

Okay, sorry for what may seem like a stupid question, but I have to ask it b/c I dont think it works, but my boss for some reason thinks it does, here it goes.

401(K) Profit Sharing Plan with Prior Pension Plan Assets merged in.

All participants are still employeed with balances, can you draft something in the document that states all money will be rolled out of the plan into individual IRA's except the 401(k) money? I have never heard of such an idea before, considering everyone is consider "active". Any ideas!

[JanetM]

Hmmm, let me guess.... the pension assets have protected benefits attached and the employer is trying to get around them by putting them in IRA....

Off the top of my head I don't see how you can force trustee to trustee transfer of these assets to IRAs without terminating the entire plan.

If they want to do this they could do it by amending the plan to allow in-service withdrawal of pension assets? They can't force the assets to roll to IRA as participants will have option of taking cash.

[four01kman]

I don't think pension plan assets can be invaded through in-service withdrawals. Those withdrawals are limited to profit sharing plans [including 401(k)]. The basis 401(a) regulations specifically restrict pension plan payouts.

[JanetM]

opps - you are correct. Seems they are stuck with keeping the funds in the plan until folk terminate.

[James Matt Ullakko]

What if these pension assets were from Pre-ERISA Money Purchase Plan? Could you invade through in-service? I seem to remember some sort of provision dealing with this outlined in the ERISA outline book, but I'm too lazy to look it up.

Anyone know off top of head?

Thanks.