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IRS Reg for Lump Sum Eligibility Relating to Div Pass Through


Guest simma7

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Guest simma7

Is there a place I can find in the IRS Regulations that specifically explains that within a qualified plan, the Dividends from the Employer Stock that are paid out to a participant, do not affect that participant's Lump Sum Eligibilty?

Even after a qualifying event?

Also, is there an IRS regulation that explains what actually disqualifies a participant from lump sum eligibility?

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You're looking at two mutually exclusive rules. The Dividends are payable to the participant despite any distrbution restrictions. "IF" the participant decides to leave them in the plan, they will be treated as investment gains and will be 100% vested. So, an individual may be only 20% vested in an employer security but would be entitled to 100% of the dividend payable on that security. That may be paid regardless of any distributable event; so how can that possible impact the lump sum definition requirement all amounts to be distributed within on taxable year after certain events?

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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Guest simma7

What I'm looking for is if there is any IRS wording regarding dividend payments that are sent directly to the participant as a distribution from a 401k plan. Dividend payments from a qualified plan do not impact a participant's lump sum eligibility. I wanted to know if this was explicit in the IRS rules and regulations.

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