Distribution at Termination?

[Guest M.A.]

Employee terminated 6/30/06. Completed request for distribution upon termination. Re-hired 7/5/06. Can distribution still be made?

[JanetM]

My vote would be no. They are now an active participant and can't receive distribution.

[Guest Pensions in Paradise]

I agree. Also, the IRS would probably consider this a sham termination, in that the participant was only terminated for one business day.

[david rigby]

Try these prior discussions, for example:

http://benefitslink.com/boards/index.php?showtopic=30896

http://benefitslink.com/boards/index.php?showtopic=29902

http://benefitslink.com/boards/index.php?showtopic=29464

[Guest M.A.]

OK, I read the previous threads. If I understand it correctly, there is no hard rule about how long you have to be unemployed before re-hired. But the IRS has the discretion to make the call that the period of termination was not long enough (which I feel in this case) or that the employer participated and disqualify the plan?

[Nate X]

Regardless if the the termination is a sham or not, the participant in this case has already been rehired. So he/she can not take a distribution by reason of termination of service.