In-Service Distribution Amendment

[Vlad401k]

Just have a quick question... Can a plan that doesn't allow for an in-service distribution be amended to allow for in-service distributions at any time?

[My 2 cents]

Just have a quick question... Can a plan that doesn't allow for an in-service distribution be amended to allow for in-service distributions at any time?

In general, I don't think so. If it is a defined benefit plan, I think it can only be amended to allow in-service distributions after attainment of age 62 (unless the plan's normal retirement date is earlier, but it must be demonstrable that an earlier NRD is justifiable within the actual industry). If it is a defined contribution plan, I think in-service distributions are subject to some restrictions. It might be necessary to be able to demonstrate hardship. I leave the details for defined contribution plans to those who work with them more than I do.

[QDROphile]

In-service distribution provisions may be added at any time, subject to the controversy over permissible mid-year amendment of safe-harbor plans. It is possible that the amendment would violate section 401(a)(4), but unlikely if the amendment is maintained even if instituted because of the desires of HCEs. As observed by My 2 Cents, the terms of the provisions must be compliant with rules relating to in-service distribution, but you were asking about timing.

[My 2 cents]

Just have a quick question... Can a plan that doesn't allow for an in-service distribution be amended to allow for in-service distributions at any time?

I interpreted "at any time" as referring to when the in-service distributions could be made once the plan was amended, not when would it be permissible to adopt an amendment permitting in-service withdrawals.

If the question is whether a plan not permitting in-service withdrawals can be amended at all to permit in-service withdrawals, I would expect the answer to be yes, so long as the effective date is satisfactory and the in-service withdrawals are only to be made when the law and regulations would allow them, provided that the timing of the amendment would not, by itself, violate 401(a)(4).