Forced distributions timing

[Guest BarbaraB]

How soon does the average plan force out termed associates? Monthly, quartely, day after terming?

We have not been doing forced distributions as we shoull have, nor has our record keeper. We want to clean this up. Our plan spells out force outs, under $5,000 but only for the amount-- not the timing. We do have a fair amount of rehires, so we want to be careful.

Thank you

[BG5150]

I certainly wouldn't do it right after termination. I thought people had to wait 30 days before receiving a distribution unless they waived the waiting period.

So, I would give them AT LEAST a month. Just make sure they got a proper termination package with distribution instructions and the 402(f) notice (Special Tax Notice).

[Bird]

We tend not to want to force people out because of the hassle of following up, but when we do, we generally send a forms package, and say if they don't respond within 60 days they'll be forced out according to plan terms. The package will go out sometime after they are entitled to a distribution; whenever all of the pieces are in place to determine what they are entitled to.

[K2retire]

We usually advise our clients not to provide the distribution paperwork until the final employer contributions are deposited for the year. Then they can initiate a force out at any time after 30 days of sending the paperwork, provided it is not delayed until more than 180 days following the sending of the paperwork.

[david rigby]

Our plan spells out force outs, under $5,000 but only for the amount-- not the timing.

Really? Most plans address this.