Integrated Profit Sharing with Inservice Withdrawals

[Guest Frank Jackson]

I am working with a plan that will not allow integrated profit sharing contributions to be used for inservice withdrawals. Was this ever restricted by law? If so, what is the cite? Was it part of the LRMs? Thanks!

[Tom Poje]

I doubt there is any cite. A plan doesn't have to allow in service withdrawals at all, so I imagine it can put whatever restrictions it wants to on them. but of course, we are talking regs and IRS, so you never know.

[LCARUSI]

Take a look at rev ruling 68-24. In general a profit sharing plan can not allow unlimited access to account balances for withdrawal.

However, the Plan could allow withdrawal of funds which have been in the Participant's account for at least 24 months. It could also allow withdrawal of all funds for participants who have at least 60 months of participation.

So it would appear the Plan you are working with is more restrictive than it has to be.

[Dave Baker]

Gosh Frank, that rings a bell ... it comes from somewhere. Was it the old Revenue Ruling that provided rules for integration, before the 401(l) regs became effective for 1989 and later plan years ... Rev Rul 71-446, I think?

[Guest Martin]

Yes, the in-service restriction was in RR71-446, but the restriction was eliminated as to profit sharing plans in the new permitted disparity regs. The only ref. to the change is in the Preamble to the proposed regs in 1988. In-service restrictions still apply to pension plans per 1.401(B)(1)(i).