Allocation for participant who "retires" several times?

[John A]

If a participant “retires” and is rehired each year for several years in a plan that grants an allocation to participants who retire, should that person get an allocation each year, even if the person does not meet the requirements for an active participant (hours and/or last day)?

[Guest ptpnthr]

It depends on what the plan says and how the proper fiduciary interprets the plan's retirement provisions. The fiduciary must interpret the plan solely in the interest of the participants and beneficiaries, which means all participants and beneficiaries. I can't imagine a fiduciary interpreting what could be one day off which the participant alleges is a "retirement" to give that participant an allocation year after year that he or she would not otherwise earn under the plan and that, but for such an interpretation, would otherwise go to other particicpants. If the participant is an HCE, you could have even more problems.

[Dave Baker]

Does sound like an end run around the prohibition against in-service distributions from a pension plan. Is it a money purchase or other kind of pension plan (in Code-speak)?

On the other hand, "retirement" in Corbel documents basically just means termination of employment for whatever reason on or after the individual's "normal retirement age," which means that the individual might have a good claim for the allocation each year.

[Guest Dook]

I agree with ptpnthr.

Further, I would question whether the employer/employee relationship was ever truly severed, and therefore, whether this participant actually retired. Does this person retire with an option to return?