HCE takes benefit first

[Dougsbpc]

Have a small 401(k) plan sponsored by an accounting firm. They were bought by another firm and decided to terminate the plan.

We explained that we would obtain benefit elections then prepare an instruction letter for distribution all at one time after all elections were received and verified as properly executed.

One of the two partners of the firm (and also a plan trustee) received her benefit elections, signed them and then immediately called the brokerage firm to transfer her benefits to an IRA.

This plan has self-directed brokerage accounts.

Is it a problem that the key employee and HCE was paid her benefits weeks before any other employees received their distribution?

Thanks.

[Bird]

Not necessarily. If everyone had the same opportunity, I don't see a problem - weeks is not a discrimination issue IMO. As long as costs do not become a factor.