In-service Distribution

[retbenser]

A participant age 63 wants to get an in-service distribution and roll it over to an IRA in 2013.

The plan document allows for in-service distribution after age 62.

Question:

Can the participant take the entire "Lump-Sum" value of the vested accrued benefit?

Or is the in-service distribution restricted to the amount of the (annual) vested accrued benefit?

[Andy the Actuary]

What does the Plan document state?

[Draper55]

IMHO i think this is doable assuming the plan is written to allow for such

a distribution(some are not)and other violations do not occur such as

436, 401(a)(4) 110% rule etc.

[Effen]

Also, if the plan is still active, the document will define how future accruals will be handled. If the plan offsets future accruals by the actuarial equivalent of previously paid benefits, they may end up not getting any additional benefit for additional future service.

As ATA said, all this should be in the plan document.

[retbenser]

What does the Plan document state?

The plan is states that the distribution is "all or a portion" of the vested Accrued Benefit.

But can we amend the plan allow in-service distribution equal to the lump-sum equivalent of the vested Accrued Benefit?

So the question is: Is this lump-sum distribution legally allowed (assuming we amend the plan)?

Thanks.

[Andy the Actuary]

Look at the optional forms of distributions section of your plan. Determine under which conditions, if any, a lump sum may be distributed.