small plan, all participants quit together

[Earl]

all 3 plan participants walked off the job. they will be due a contribution for CY 2014.

the plan provides for immediate payment.

can the sponsor wait until the 2014 contribution is deposited before making full payment at one time?

thank you!

[QDROphile]

A good plan document will answer the question. Absent a clear answer from the plan document, I would avoid deviation from standard practice. What whould the plan have done if one of the three had terminated? I suspect that distribution would be prompt and then there would be a tail distribution of the 2014 allocation.

The answer might be affected by the employer's decison to terminate the plan or not.

[Earl]

Although the plan is about 7 years old there has never been a distribution before. The Plan will not terminate, the business is strong.

The only thing I can find in the document remotely close is "takes into account the Participant's entire Account Balance" but it is very confusing.

I think the information about walking out was not helpful and I should have left it out because it does not matter why the terminations happened.

[Tom Poje]

this is an example from one document. note option (b) would wait until after the final contribution is made.

I would add, (and I am guessing on how the asset house handles things) there is generally a fee charged for a distribution. let's say $50. if the participation takes a distribution, and then later receives an additional contribution then there will probably be an additional fee charged. that doesn't seem to be in the participant's best interest. but if option (a) is selected that certainly could happen. On the other hand, if the balance is large enough you can't force the participant out, so perhaps you tell the participant up front. (But then who knows is the investment will be worth as much by the time the final contribution is made)

Time of Payment (Other than Death)
Distributions after Termination of Employment for reasons other than death shall commence (Section 7.02):
a. [ ] Immediate. As soon as administratively feasible with a final payment made consisting of any allocations occurring after such Termination of Employment
b. [ ] End of Plan Year. As soon as administratively feasible after all contributions have been allocated relating to the Plan Year in which the Participant's Account balance becomes distributable
c. [ ] Normal Retirement Date.
d. [ ] Other:

[Bird]

When immediate distributions are allowed (always in a takeover plan; my new plans say "after the end of the year and after all contributions have been deposited"), we'll pay what they have in there now and pay the rest (add'l contributions) when deposited.