Bender Prototype Plan: Early Distribution

[Guest jfreeborn]

Hello everyone

I have a client who would like to take a distribution from a DB account. he is in his 30s, but is fully vested in the plan. My initial reaction was that it was not permissible under any DB plan to take a distribution before the normal or early retirement date. However, someone recently told me they were cashed out of a DB plan a while ago. Anyone know if this is in fact an option?

A section in the plan says that a "A participant whose employment is terminated on account of resignation or discharge before meeting the eligibility requirements of Normal (or Early) Retirement will have his benefits deferred to his Normal (or Early) Retirement Date, subject to the provisions of 2.5.2, unless otherwise elected in Part II.G.3."

Under part II.G.3 of the Adoption Agreement, box "b" is checked, which states "Distributions may be made at the participant's election within a reasonable period following the participant's date of termination of employment."

So it seems that distributions can be made prior to reaching a specified retirement age???

By the way, the plan is a Bender, LLC Non-Standardized Defined Benefit Pension Plan Basic Document #2. I've heard some people on here talk about prototype plans. This is my first experience with them, so I wasn't sure if it would be helpful to point out the plan.

[Andy the Actuary]

(1) Plan must provide for distribution upon termination of employment.

(2) Distribution can be made in-service if plan is terminated.