Retired Participant & her distribution

[Pammie57]

A participant retired in May of this year.  She is on Social Security.  She sent in a form for only a partial distribution.  The Plan document specifically say "lump sum" only and no annuities.  She is wanting to take a minimum out each month so that she does not mess up her SS....

What should the Plan Sponsor do?  Force her out/rollover to an IRA?  Her balance is around $1800.00

Would allowing her to take 4 partial distribution violate the plan terms?  Sounds like she is attempting to have her account annuitized.

Feedback please.  Thanks.

[MoJo]

If the plan doesn't allow for partial distributions, then it would be a problem - and a precedent that could cause future problems.  Either amend the plan (if the plan sponsor wants) or have her roll the distribution to an IRA where she can take out what she wants, when she wants it.

[CuseFan]

an 1800 distribution isn't going to mess up anyone's social security retirement benefit unless she has so much income it pushes her into a higher bracket where more of the benefit is taxed.

don't violate plan terms - pay lump sum or pay nothing - she can roll to ira and make her own installments if necessary.

[david rigby]

What is the meaning of "...mess up her SS..."?

 

[Bill Presson]

She may be worried that this is considered earned income and she is limited or it reduces her SS.

We know that's not the case, but she may not.