Distribution for Fill-In Employee

[DP]

I have a calendar year plan with a 3% SHNE contribution. A participant terminated in February 2016 so she will be entitled to a 2016 SHNE contribution. She will be working very infrequently as a fill-in employee. The plan sponsor is asking if she can go ahead with a distribution for this participant. The plan allows for distributions immediately after termination.

Should she be paid out or not?

[Lou S.]

Is she terminated and will be rehired later or is she on call and still an active employee just not currently needed?

[Bill Presson]

This is a constant battle I fight with all doctor's offices. If they actually want to terminate the employee, I tell them I'm fine with that, but they need to enter a termination date and complete any other paperwork and then do a rehire when the person comes back. Quite often, they decide the person is just on call.