Restricted Distributions (1.401(a)(4)-5(b))

[lexi]

1.401(a)(4)-5(b) restricts distributions with no mention of posting bond, letters of credit or escrow accounts.

Rev. Proc. 92-76 details what the plan sponsor must do if it permits a distribution of a restricted amount.

Q: Does the employer HAVE to provide for any lump sum distribution in excess of the straight life annuity or social security supplement to which the EE is entitled? In other words, can the ER say, we don't care what Rev. Proc. 92-76 says, you are getting the annuity or social security restricted amount?

[Effen]

The sponsor needs to follow the plan's provisions. If there are no provisions in the plan allowing restricted employees to receive a lump sum w/ strings, then there is no requirement to add them. However, if the provisions are already there, they need to follow them. Most plans, including many prototypes, contain provisions permitting the distribution.

The answer will be in the document (or not).