Benefit elecitons for "two-stage" distributions

[KJohnson]

A 401(k) Plan which is subject to joint and survivor requirements provides for immediate distribution upon retirement, early retirement or disability but also provides that a participant who retires or is disabled will receive a profit sharing and match contribution at the end of the year.

If a Participant elects a distribution prior to the end of the plan year can you subsequently distribute the additional profit sharing and match for that plan year using the original spousal consent or do you have to start the process again?

[Wessex]

If I remember correctly, the REA regulations discuss this issue, and the answer may depend on whether the additional benefit is accrued before or after normal retirement age. If before normal retirement age, a new election and spousal consent is required; if after normal retirement age, the subsequent distribution may be made in the same form as the prior distribution without further elections or consents. I believe this latter treatment has to be specified in the plan, otherwise new elections and consents are required.

[KJohnson]

Wessex--Thanks I had looked at the 401(a)-20 regs and I didn't know whether the contribution for the year would be an "additional accrual" since the right to the contribution is accrued upon retirement or disability (i.e. before the "first" annuity starting date) although not actually paid into the Plan until the end of the year.

[This message has been edited by KJohnson (edited 10-07-1999).]

[david rigby]

Just a thought:

Suppose the marital status has changed?

1. If EE was married at the original date and is still married, then a valid spousal election was (one hopes) done then?

2. If EE was married at the original date, and the spouse is now deceased?

3. If EE was married at the original date and is now divorced? (Assume no QDRO.)

4. If EE was married at the original date and the spouse is now deceased?

5. If EE was not married at original date and is now married? (Assume the 12-month marriage rule is either not applicable or has been satisfied.)

[This message has been edited by pax (edited 10-07-1999).]