In-Service Dist a protected benefit?

[Guest HiKidsImASrPensionAdmin]

We have a profit sharing plan where one of the HCE's wants to amend the plan to allow in-service distributions after the participant has been in the plan for at least 5 years. Then he is going to take a large portion of his account balance (to pay for his personal bankruptcy!), and then he wants to amend the plan again to remove the in-service distribution provision. I know hardships and loans are not considered a protected benefit, but would this type of in-service provision be a protected benefit? If we did the amendment then another amendment to remove the in-service, would part's w/ an acct bal at the time of the initial amendment have to grandfathered into the in-service provision? Finally...he wants to have the in-service provision only open for 2 days...seems to me that it should be open for a longer period...any thoughts?

[rcline46]

It is a protected benefit. Once in cannot be removed for people/balances at the time in was in force.

[QDROphile]

The amendment scheme also violates section 401(a)(4).

[namealreadyinuse]

If the window was in the original amendment, it wouldn't be a take away, but your amendment is totally discriminatory if an HCE is involved. Don't do this.

[ERISAnut]

That would be debatable as to whether or not the "window" in this case would prevent a cutback (for instance, lets assume the only employee to utilize this option during the period was an NHCE). I've heard of windows applying to subsidies, but not for optional forms of payment.

I would argue that once a form of payment is made available with respect to a participant's account, then that form of payment may not be eliminated; even if the attempt is to make this form of payment available under a "window". But then again, this is debatable.